It was a good day for stock selling in Europe. DAX Index moved above 12,000 points. On the other side, Moody’s has lowered the credit outlook for the major German car manufacturers Daimler (ETR:DAI stock jumped 7.73% on Tuesday), BMW (ETR;BMW stock went up 5.23% up today ) and VW (ETR:VOW3 share gained 5.74% today) to “negative”. The fundamental rating remains at Daimler and VW at “A3”, at BMW at “A2”.
This means that the companies remain within the “investment grade” (upper medium grade, up to A3). However, there is a risk of a downgrading to “Lower Medium Grade”, the last stage before classification in the “non-investment area”, also called “junk level”. The worse the credit rating, the higher the refinancing costs for the companies.
Moody’s furthermore threatens Wirecard to downgrade its creditworthiness to junk level. The experts put the “Baa3” rating on the watch list for a possible reduction. So far, the outlook has been “stable”. The current classification of “Baa3” is just in the so-called investment area – the junk area begins one level lower.
Moody’s cited the continuing uncertainty about the media allegations of balance sheet falsification, which were not eliminated by a special audit, as well as the multiple postponement of the publication of the 2019 annual financial statements as the reason for the more negative assessment.