Fitch downgrades Michelin

Fitch Ratings said it downgraded the long-term issuer default and senior unsecured ratings of Compagnie Generale des Etablissements Michelin and Compagnie Financiere Michelin to BBB from BBB+, their short-term issuer default ratings to F3 from F2 and Michelin's €500 million hybrid bond rating to BBB- from BBB.

The outlook was changed to negative from stable.

The agency said the downgrade reflects its belief that Michelin's financial profile will not be commensurate with its previous rating level in the short-to-medium term in light of the deterioration in the automotive market and increased raw material costs.

The ratings continue to be supported by Michelin's strong market position, good geographical and end-market diversification, good reputation and brand recognition and the oligopolistic structure of the tire sector, Fitch said.

The negative outlook reflects the risk of a severe and protracted deterioration in the automotive industry, which could further weaken Michelin's credit profile, Fitch said.

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