PARIS, Feb 14 (Reuters) - Standard & Poor’s on Thursday cut its rating on French automaker PSA Peugeot Citroen’s debt by a notch to BB-, pushing it further into “junk” territory.
S&P, which also downgraded Peugeot’s captive finance arm, cited Peugeot’s results reported earlier this week, when it reported its biggest-ever full-year loss and said it burned through cash at the expected rate.
“In our view, in 2013, Peugeot will find it difficult to meet its objective of halving its level of cash depletion in Europe’s intensely competitive car market, given the company’s continually high excess capacity and ongoing restructuring needs,” S&P credit analysts wrote in a note.
The ratings agency, which last downgraded Peugeot in July, also said it was keeping a negative outlook on the automaker’s debt, which it said “ reflects our view that Peugeot’s weak performance in a continuously stressed market environment and ongoing challenges could hamper its plans to restore breakeven, in free operating cash flow terms, by the end of 2014.”
Peugeot earlier this week stuck by its pledge to halve the cash-burn rate, which in 2012 amounted to 3 billion euros, including 2.5 billion at its auto division. (Reporting By Christian Plumb)