S&P keeps Fiat Chrysler unchanged following CEO news

(Reuters) -- S&P has kept its rating and outlook on Fiat Chrysler Automobiles unchanged at BB+ (positive) following the weekend news that CEO Sergio Marchionne has been replaced by Michael Manley.

"The succession was originally set to occur in 2019 but was unexpectedly moved up due to complications with Mr Marchionne's health," S&P wrote on Monday afternoon.

The positive outlook reflects the possibility of an upgrade if the company continues to show improvements in profitability and cash flow generation, while maintaining solid leverage metrics and not attracting fines of more than €2bn from the US Department of Justice (over excess diesel emissions), S&P said.

Lucror Analytics broadly concurred with S&P's comments but noted that Manley "has big shoes to fill", saying Marchionne had been instrumental in directing the group through the Chrysler takeover and the spin-off of CNH Industrial and Ferrari.

FCA's bonds widened up to 10bp on Monday before retracing most of the losses.

FCA will release Q2 results on Wednesday. Lucror expects improved year-on-year sales on the back of mild volume growth and a better price mix. It also thinks the company will be net debt free, from €1.3bn in Q1 2018, because of significant free cashflow in the quarter.

The carmaker is Ba2/BB by Moody's/Fitch (st/pos).

July 24, 2018, 14:57:00 GMT

By Pauline Renaud