* Porsche refinances debt for Volkswagen stake
* Fitch cuts Fiat, Peugeot, Renault debt to ‘junk’
* Autoliv makes cash call to boost balance sheet
* Ford in detailed talks with Volvo suitors
By Michael Shields and Quentin Webb
FRANKFURT/LONDON, March 25 (Reuters) - German carmaker Porsche PSHG_p.DE bucked the trend of car makers struggling to secure finance on Wednesday, as a trio of its European rivals saw their debt ratings cut to junk status by one rating agency.
Facing a midnight deadline to refinance a 10 billion euro ($13.6 billion) loan used to buy shares in Volkswagen AG VOWG.DE, Porsche struck a deal with a group of banks at what it called "market conditions". [ID:nLP632598]
News of the deal came as the rating agency Fitch cut its ratings on the debt issued by Renault RENA.PA, Peugeot PEUP.PA and Fiat FIA.MI to 'junk', citing concerns over profitability as slumping consumer demand sends car sales plummeting. [ID:nLP698639]
Fitch cut its senior unsecured ratings on Fiat and Peugeot by one notch to BB+ and Renault by two notches to BB. It also assigned a negative outlook to all three firms.
The agency expects car sales in Europe to decline by more than 15 percent in 2009 and it said the trend is likely to continue in 2010, albeit at a slower rate.
Autoliv said it would raise $364 million in a stock offering aimed at its largest investors and underwritten by Morgan Stanley. The company said it also wanted the cash for possible acquisitions should any opportunities arise, adding that it had no liquidity problems.
PORCHE SET TO MOVE
Sportscar maker Porsche had been battling to refinance its loan for sometime, increasing its fees to support the deal as the deadline approached.
With the new financing now in place, which allows Porsche to increase the loan by an extra 2.5 billion euros, the market is expecting the car maker to raise its stake in Europe’s biggest automaker to 75 percent from its current level of 50.8 percent.
“The increased credit volume could be an indication that Porsche will increase its VW stake in the course of 2009, as mentioned before by the company,” DZ Bank said, adding its net debt position was better than some market players had thought.
Porsche has said it could boost its VW voting stake to 75 percent this year if the economic conditions are right.
Demand for cars in Germany has been boosted by a government payment of 2,500 euros ($3,375) for consumers swapping vehicles over nine years old for new models, and a government source said the main coalition parties had in principle agreed to extend the scheme beyond 2010.[ID:nLP951246]
Progress was also reported in a deal to sell another struggling car maker. U.S. auto giant Ford F.N, grappling with the deepest downturn in U.S. industry sales in 27 years, said it was pleased with the "number and quality" of potential buyers for its Swedish unit, Volvo. [ID:nLP20097]
“We’ve had preliminary discussions to determine the level of interest in the Volvo business ... and we’re now talking in more detail to those parties about the future for Volvo,” said John Gardiner, Ford’s European director of strategic communications.
CAR PARTS RESTRUCTURING
Renault and Peugeot meanwhile said they were looking at ways of supporting ailing suppliers in France. [ID:nLP945187]
Renault said would consider buying stakes in domestic equipment suppliers if necessary, its Chief Operating Officer Patrick Pelata said.
“Equipment makers are facing the same constraints as carmakers. In certain cases, we must find solutions together. That could be a stake purchase or a restructuring,” said Pelata.
PSA Peugeot Citroen, which considers 85 suppliers to be in significant financial difficulty, had no plans to buy into any of those companies but would do its best to help them in other ways, Chief Executive Christian Streiff told a senate hearing.
PSA already owns some 71 percent of parts maker Faurecia EPED.PA.
At 1500 GMT, the DJ Eurostoxx auto index was up 2.5 percent, with Volkswagen shares up 8 percent, Porsche up 1 percent, Renault up 3.5 percent and Peugeot down 4.5 percent. Autoliv fell 12 percent. (Additional reporting by Tessa Walsh, Anna Ringstrom, Sven Nordenstam, Helen Beresford, Andreas Moeser; writing by John Stonestreet; editing by Richard Hubbard)