According to Moody’s the change was triggered by “the severe and rapid downturn in demand for most of Volvo’s products on a global basis” and this is expected to result in “a weakening of Volvo’s financial flexibility” that is no longer commensurate with the former rating.
Moody’s acknowledges that the Volvo Group “has taken early corrective measures which will ensure that the company retains its solid business profile and comfort its competitive position”, and that ”within the Baa1 rating category Volvo has a comfortable cushion to withstand an even more pronounced or extended downcycle than currently anticipated …”.
Moody’s also believes that “Volvo’s business position in its key divisions Trucks and Construction equipment remains strong, enabling the company to emerge more powerful from a future upturn of demand longer term”.
”Even if a stable Baa1 rating is good in today´s macro economic situation, we believe we have the qualifications to regain the A3 rating, which is the corresponding rating level that Standard & Poor´s recently announced for the Volvo Group”, says Mikael Bratt, CFO of the Volvo Group.
February 13, 2009
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