Moody's downgrades TI

Moody's Investors Service said it downgraded TI Automotive Ltd.'s corporate family and probability-of-default ratings to Caa1 from B3 and its senior secured bank credit facility to a range of Caa3 to B1 from a range of Caa2 to Ba3.

The outlook remains negative.

The downgrade reflects the agency's view that restructuring efforts and improvements in operating efficiency might not be sufficient to offset the negative earnings impact from the sharp decline in automotive production volumes, leading to a heightened risk of weaker-than-anticipated credit metrics and diminishing headroom under financial covenants.

The ratings continue to consider TI's resilient performance despite a very challenging environment, its solid market positions and its substantial restructuring efforts and subsequent efficiency improvements, the agency said.

The negative outlook reflects primarily the significant uncertainty around the length and severity of the current downturn in car production volumes as well as the increased challenge to remain in compliance with financial covenants, Moody's said.

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