Fitch applies BBB to Delphi Automotive notes

Fitch Ratings said it assigned Delphi Automotive plc’s proposed euro-denominated issuance of 10-year senior unsecured notes a BBB rating.

The rating is in line with Delphi Automotive’s BBB issuer default rating, which has a stable outlook.

Delphi Automotive will issue the proposed notes, whereas the company's existing senior unsecured notes have been issued by Delphi Corp., a subsidiary of Delphi Automotive. However, the proposed notes will be fully guaranteed on a senior unsecured basis by the same subsidiaries that guarantee Delphi's notes and Delphi's unsecured credit facility, removing any structural subordination that the proposed notes would otherwise have in relation to Delphi's existing notes.

Proceeds will be used for general corporate purposes, including the redemption of Delphi's existing 2021 notes.

Fitch noted that the euro-denominated issue is likely to bear substantially lower interest than the 6.125% interest on Delphi's existing 2021 notes. Also, by issuing in euros, Delphi Automotive is better able to match its debt to its cash flows, as 38% of the company's 2014 revenue was generated in Europe, Middle East and Africa, the agency said.

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