LONDON, Dec 23 (Reuters) - Italian auto giant Fiat could still have its credit ratings cut despite selling its holding in General Motors and its European finance unit Fidis in order to cut debt, Standard & poor's said on Monday.
"These sales do not come as a surprise to us and the sale of the Fidis finance unit is already factored into our analysis," said Virginie Casin, an analyst at S&P. "Fiat remain on review for a possible downgrade and these sales do not mean they will not be cut."
Fiat's short-term and guaranteed commercial paper ratings from S&P are at A-3, just one notch above "junk". The review should be complete by the end of January, Casin said.
Fiat sold its stake in partner General Motors Corp. for $1.16 billion on Friday.
The sale, announced late on Friday, should help Fiat towards a target to cut net debt to less than 3.6 billion euros by early 2003 and took the heat off Fiat's need to sell other assets to cut borrowing and avoid a debt downgrade.
The firm also sold 51 percent of its European financing unit Fidis to its four top creditor banks -- a deal which should knock about six billion euros off its gross debt, which stood at 32.8 billion euros at the end of September. The reduction would come mainly through Fiat deconsolidating customer debts, passing the liability on.