Moody's drops American Axle

Moody's Investors Service said it lowered American Axle & Manufacturing Holdings, Inc.'s corporate family rating to B2 from B1 and is reviewing the rating for further possible downgrade.

The downgrade results from the continued erosion in the North American market for SUVs and light trucks, and the resulting pressure on the company's credit metrics, the agency said.

Although American Axle may realize important structural cost benefits from the constructive labor contact that was completed in May and from other restructuring actions, the benefits of these initiatives will be significantly offset by the continuing erosion of demand for SUV's and light trucks in the wake of high fuel costs and global economic uncertainty, Moody's said.

Moody's said its review is focusing on the degree to which American Axle will be able to further adjust its cost structure to contend with the severe downturn in North American automotive markets, which is expected to continue into 2009.

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