Fitch keeps Navistar on negative watch

Fitch Ratings said the debt ratings of Navistar International Corp. and its subsidiary Navistar Financial Corp. remain on Rating Watch negative, including Navistar's BB issuer default rating, BB senior unsecured debt rating and B+ subordinated debt rating and Navistar Finance's BB senior unsecured bank lines and BB senior unsecured debt rating.

This follows the notice of default Navistar received from holders of its 4¾% senior subordinated notes arising from the delay in filing audited year-end financial statements. The debt holders claim that a default has occurred due to the lack of timely filed audited financial statements for the year ended Oct. 31, Navistar has a 60-day cure period to resolve the default.

Fitch said the notice raises the concern that there may be an acceleration of the $220 million principal amount, that other debt holders may give notice and that, despite obtaining a filing-default waiver through May 31 from the banks, the banks and other debt holder's could also accelerate repayment under cross-default provisions.

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