Fitch cuts ratings for American Axle

By Associated Press
September 4, 2008 | Comments (0)

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Fitch Ratings cut its ratings for American Axle & Manufacturing Holdings Inc. another notch into junk status, saying that the slump in the automotive industry will hurt the company's production levels more than previously expected.

On Wednesday, Fitch cut American Axle's issuer default rating to "B+" from "BB-" and senior unsecured debt to "B+/RR4" from "BB-."

In addition, Fitch said it expects American Axle to take negative cash flows and a deteriorating balance sheet into 2009 as it works to reduce its U.S. manufacturing capacity and work force.

Fitch said that high gas prices and a weak overall economy have resulted in a steep drop in demand for General Motors Corp.'s pickup trucks and large sport utility vehicles, which make up the bulk of American Axle's business.

Although Fitch said it expects demand for those vehicles to eventually rebound, it considers part of that drop to be permanent.

American Axle shares rose 6 cents to $5.55 in late morning trading.

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