Sept. 19 (Bloomberg) -- Continental AG, Europe’s second-largest auto-parts maker, was upgraded to investment grade status by Moody’s Investors Service following the reduction of Schaeffler AG’s stake in the company.
Moody’s lifted Hanover, Germany-based Continental’s credit rating one level to Baa3, the lowest investment-grade ranking, the ratings firm said in a report today. Bearings manufacturer Schaeffler and its holding company Schaeffler Verwaltungs GmbH raised about 950 million euros ($1.3 billion) this week by selling a combined 4 percent holding in Continental, reducing its stake to 46 percent.
“Throughout this year, Continental has exhibited strong credit metrics that are commensurate with investment-grade rating levels on a standalone basis,” Falk Frey, a Moody’s analyst in Frankfurt, wrote in the report. “The upgrade to Baa3 was prompted by a further slight weakening in the link with Schaeffler.”
Continental’s rating was dragged down to junk by debt-laden Schaeffler’s stake that was bought as part of a failed takeover attempt during the credit crisis. The tiremaker raised 2.3 billion euros from bond sales this year as it refinances existing notes that pay higher interest. The company last issued securities on Sept. 12 that were priced to yield 2.625 percent, Bloomberg data show.
To contact the reporter on this story: Katie Linsell in Madrid at email@example.com
To contact the editor responsible for this story: Shelley Smith at firstname.lastname@example.org