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CREDIT: Fiat CDS Cut to UW-30% vs OW-30% at BofAML 2014-01-14 07:49:05.626 GMT
By Francesca Cinelli Jan. 14 (Bloomberg) -- Cuts recommendation on Fiat following deal to buy out remainder of Chrysler; downgrades Fiat bond curve, with some exceptions, to Underweight-70% (expected spread underperformance) from Underweight-30% (investment offers unattractive carry with spreads unlikely to widen) as spreads don’t reflect weak fundamentals at Fiat. * While sees continued growth in North America and Luxury division, and gradual recovery in Europe, expects cash generation to remain poor because of substantial increase in capex * Initiates on Fiat 7.75% 2016 bonds, 6.625% 2018 bonds and 6.75% 2019 bonds with an Underweight-70% * Keeps Overweight-70% (carry, plus some spread tightening expected) on Fiat 7.625% 2014, 6.875% 2015 and 5.625% 2017 bonds which benefit from joint-guarantee from CNH Industrial
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To contact the editor responsible for this story: Francesca Cinelli at +39-02-80644-252 or fcinelli@bloomberg.net