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ARCHIVE | Criteria | Corporates | Industrials: Regulated European Subsidiaries of Automakers May Be Rated Slightly Higher Than Parent Jan 05
Standard & Poors, Jan 2005
Abstract
When assessing different companies within a group, Standard & Poor's generally caps ratings on subsidiaries at the level of their operating parent. However, the example of several European captive finance subsidiaries (CFSs) of major automotive groups illustrates the circumstances under which a slight rating differentiation is justified, enabling the assignment of ratings above those of the parent. The following conditions are considered essential for such a differentiation in ratings: The CFS is a regulated entity; There is a regulatory and legal framework that limits parental influence; There are insolvency laws that do not entail the extension of bankruptcy proceedings from the parent to the subsidiary. Standard & Poor's believes that these general preconditions exist for the automotive CFSs that it...
Companies mentioned in this report are: Ford Motor Co.,Renault S.A.,Peugeot S.A.,Volkswagen AG,RCI Banque,Banque PSA Finance ,Volkswagen Financial Services AG,Volvofinans, AB,Volkswagen Bank GmbH
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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