Fitch downgrades Volkswagen to BBB+/F2

Fitch Ratings said it downgraded Volkswagen AG's long-term issuer default rating to BBB+ from A and short-term issuer default rating to F2 from F1.

The outlook on the long-term issuer default rating is negative.

Fitch said the downgrade reflects the corporate governance, management and internal control issues highlighted by the ongoing emission test crisis related to up to 11 million diesel-powered vehicles. The agency already incorporated the group's relatively weak corporate governance in its ratings but it believes that the emergence of a fraud of this magnitude, going either unnoticed or uncorrected by top management for so long is not consistent with a rating in the A category.

Volkswagen's recent admission that it understated carbon dioxide emissions on 800,000 vehicles reinforces this view and highlights the fundamental issue of internal control failure within the group.

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