S&P assigns BB- to Ford Otomotiv, notes

S&P said it assigned preliminary BB- ratings to Ford Otomotiv (Ford Otosan), a licensed manufacturer of Ford Motor Co., and its planned sale of up to $500 million in unsecured notes. The outlook is positive.

“The rating on FO is constrained at one notch above our B+ transfer and convertibility (T&C) assessment on Turkiye due to the company's sizable operations in the country. We anticipate that the group will generate about 75% of its revenue and 85% of its EBITDA from assets in Turkiye over 2024-2025, meaning large exposure to the country's economic conditions and jurisdiction risks.

“In a hypothetical sovereign default, we anticipate that the group would maintain adequate liquidity thanks mainly to its strong share of revenue denominated in euros, largely mitigating its exposure to devaluation of the Turkish lira (TRY),” S&P said in a press release.

FO will use the proceeds for general corporate purposes, including funding capital expenditures and repaying short-term debt.

The positive outlook reflects the agency’s outlook on Turkiye and that the company would pass its sovereign default and transfer and convertibility stress tests, S&P explained.

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