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Fiat still "junk" despite turnaround

Ralph Hanson

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599 views Jan 29, 2008

Fiat still "junk" despite turnaround

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Not that long ago Fiat was reeling in debt and was on the brink of bankruptcy but over the years control of the carmaker changed hands several times and now things couldn’t be better. In fact, last week Fiat announced it had paid off all its debt and was sitting on a positive cash flow of more than $500 million. Better yet, the carmaker is on track to end 2008 with no debts at all and a cash position of close to $2 billion.

Despite the recent strong performance, Fiat’s credit rating still has a ‘junk bond’ status. Something its CEO Sergio Marchionne said was “obscene” because the carmaker no longer has any debt. Analysts predict it will take a further six months to a year before Fiat’s ratings are upgraded to ‘investment grade’ status, and this will only happen if it can sustain its current performance and market share, Reuters reports.

Remember this is the same company that owns the Maserati, Ferrari and Alfa Romeo brands in addition to its own Fiat and Lancia labels and trucking business. Considering the number of exciting new products on the horizon, increased sales and U.S. expansion plans, we’re sure Fiat’s junk status won’t stay that way for long.