S&P ups American Axle debt to BB-

Standard & Poor's said it affirmed its BB- corporate credit rating on American Axle & Manufacturing Holdings Inc. The outlook is stable.

At the same time, S&P raised its issue-level ratings on the company's senior unsecured debt to BB- from B+ and revised the recovery ratings to 4 from 5. The 4 recovery ratings indicate the agency’s expectation of average (30%-50%; lower end of the range) recovery in the event of a payment default.

“Our ratings on American Axle reflect the company's participation in a cyclical and intensely competitive industry that is marked by high fixed costs and ongoing pricing pressure,” said S&P credit analyst Nishit Madlani in a news release.

“We assume that American Axle will reduce its significant customer concentration with General Motors Co. over time and expect that the company's new business backlog, combined with ongoing growth in vehicle content, will support the recent improvement in its credit metrics over the next two years,” Madlani said.

S&P’s stable outlook on American Axle reflects the agency’s expectation that the company will see steady organic growth in 2016 because of its exposure to the resurgent truck market. The agency assumes the company’s debt-to-EBITDA metric will remain around 3 times to 3.5 times and that its FOCF-to-debt ratio will remain at about 5% to 10% over the next 12 months.

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