Moody's downgrades AAG

Moody's Investors Service said it downgraded to B3 from B2 AAG FH LP's corporate family rating, its probability of default rating to B3-PD from B2-PD and the $243.5 million senior unsecured note due July 2024 to Caa1 from B3. The outlook has been changed to negative from stable.

"The downgrade to B3 and negative outlook reflects AAG's growing refinancing risk and high leverage at around 7.4x (Moody's adjusted debt/EBITDA as of Q2 2022) which, if sustained, will make it more difficult to refinance its senior unsecured notes well before its maturity in July 2024," said Dion Bate, a Moody's vice president and senior analyst, in a press release.

"We believe the weaker consumer environment in North America and uncertainty around new vehicle supply will make it hard for AAG to meaningfully grow EBITDA and reduce leverage well below 7x through 2023," Bate added.

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