CHICAGO–(BUSINESS WIRE)—-Liquidity in the U.S. auto supplier industry is expected to remain sufficient over the next 18 months despite numerous financial and operating pressures that are unlikely to abate, according to Fitch Ratings.

Nearly all the large, non-investment grade rated auto suppliers were able to expand liquidity and extend maturities by accessing the leveraged loan market over the past two years, during a period when credit market conditions were considerably more relaxed. Fitch notes that among these same issuers, operating cash generation is expected to remain weak over the near-term, limiting the ability to make improvement to balance sheets that have incurred significant leverage over the same period.

‘Refinancing risks may have been simply deferred to later years rather than resolved,’ said Mark Oline, Managing Director, Fitch Ratings. ‘The industry was able to obtain highly favorable lending terms that are no longer available in today’s market.’

Margin improvement and/or the reversal of negative cash flow trends will largely be the function of successful restructuring programs, and the geographic, product and customer diversity of the manufacturers.

As discussed in the full report, key liquidity and credit analysis is focused on capital expenditures, working capital and cash balances.

This report is part of a larger global liquidity review initiated by Fitch in May 2007 of its rated issuers across corporate finance as a number of liquidity-based sensitivities in the market continue to influence both issuer and investor decisions. The review’s goal is to gain a better perspective on the magnitude of maturities that would be coming due over the next 24 months per each North American corporate sector, and what organic and contingent sources were available to meet these obligations during this period of the credit cycle.

The full report ‘Liquidity Focus: Auto Suppliers’ is available on Fitch’s website www.fitchratings.com

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