S&P downgrades Adient

S&P said it reviewed the recovery and issue-level ratings on Adient plc that were considered under criteria observation (UCO) after the agency published its revised recovery ratings criteria Dec. 7.

With the criteria review complete, S&P said it removed the UCO designation from these ratings and lowered all of the issue-level ratings on Adient's secured debt to BBB- from BBB because the issue ratings are now capped for most speculative-grade issuers at BBB-, regardless of the recovery rating.

This change de-emphasizes the weight recovery plays in the up-notching of issue ratings for issuers near the investment-grade threshold since recovery is a smaller component of credit risk when default risk is more remote and because recovery prospects may be less predictable and more variable for these issuers, S&P explained.

Importantly, this revision does not reflect a change in the assessment of the company's default risk, which is indicated by the corporate credit rating, the agency said.

S&P also said it affirmed the BB ratings on the company's senior unsecured notes.

These actions stem solely from the application of the revised recovery criteria and do not reflect any change in the assessment of the corporate credit rating on Adient, the agency added.

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