Bangkok--22 Dec--Standard & Poor's
NEW YORK (Standard & Poor's) Dec. 21, 2015--Standard & Poor's Ratings Servicessaid today that it affirmed its corporate credit rating on London-based CNHIndustrial N.V. and its captive finance subsidiary Racine, Wis.-based CNHIndustrial Capital LLC, including the 'BB+' long-term corporate credit ratingsand 'B' short-term ratings. The outlook is stable.
The affirmation reflects our view that CNH's financial risk profile remains"significant" under the new criteria. We now analyze the financial risk of theindustrial company using deconsolidated financial statements.
"We expect CNH Industrial N.V. to maintain credit measures consistent with a'significant' financial risk profile, as defined in our criteria, includingdebt-to-EBITDA leverage at or below 4x," said Standard & Poor's credit analystSarah Wyeth. "We expect weakening demand for agricultural equipment to be
modestly offset by improving operating performance in CNH's truck andconstruction equipment segments."
We could lower the rating if the company's end markets, especially theagricultural equipment market, weaken more than expected. This could pressuremargins more and, in turn, result in weaker cash generation, causing creditmeasures to deteriorate such that debt to EBITDA is more than 4x for anextended period.
We could raise the rating if CNH reports sustainable improvement in itsoperating performance, including margins in its truck and constructionbusinesses and higher free cash flow generation. Alternatively, we could raisethe rating if the company adheres to disciplined financial policies such that
we expect debt to EBITDA to improve to well below 2x under good marketconditions to allow for cushion in cyclical downturns.