Visteon Corp. Downgraded To 'BB-' On Weakening Credit Metrics, Ratings Placed On CreditWatch Negative

  • We expect the spread of the coronavirus to sharply reduce the demand for autos and their production globally. Many manufacturers across Europe and North America are already halting their production.
  • We believe Visteon Corp.'s operating results will be weaker than we previously expected, causing its credit metrics to deteriorate.
  • Therefore, we are lowering our issuer credit rating on Visteon to 'BB-' from 'BB' and our issue-level rating on its term loan and revolver to 'BB' from 'BB+'.
  • At the same time, we are placing all of our ratings on the company on CreditWatch with negative implications.
  • The CreditWatch placement indicates our belief that the disruption of global auto production could extend beyond a few weeks. It also reflects that the demand for new cars will likely decline because of the potential economic recessions stemming from the pandemic. We plan to resolve the CreditWatch when we can assess the magnitude of the coronavirus' effect on the company's financial condition.
NEW YORK (S&P Global Ratings) March 25, 2020—S&P Global Ratings today took the 
rating actions listed above.


Visteon's revenue, profit, and cash flow will contract significantly due to 
the decline in global auto production related to the shutdown of most plants 
in Europe and the U.S.  We now expect global light-vehicle sales to decline by 
almost 15% in 2020 and believe Visteon will find it difficult to maintain its 
operating performance during the year. While the company may cut its costs to 
soften the blow, it will not likely be able to reduce its costs nearly fast 
enough to adjust to the shock from the pandemic. While Visteon had forecast a 
significant improvement in its margin due to the introduction of new products 
over the next few years, it will likely be challenging for the company to 
reach the volumes necessary to attain those higher margins.


The CreditWatch placement reflects that there is at least a one-in-two 
likelihood we will lower our issuer credit rating on Visteon. We expect to 
resolve the CreditWatch when we learn more about the coronavirus' effect on 
Visteon's financial position. We would likely lower our ratings on the company 
if we expect its debt to EBITDA to remain above 4x and its free operating cash 
flow to debt to remain below 5% with little prospect for an improvement over 
2020-2021.

We expect to resolve the CreditWatch in the coming months and are monitoring 
the group's operating performance and liquidity situation, including its 
covenant compliance.

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