LONDON, June 26 (Reuters) - Credit rating agency Standard & Poor's said on Thursday it may cut Italian industrial group Fiat's BB+ long-term corporate credit rating after the company unveiled a plan aimed at restoring the firm to profit.
S&P said in a statement that Fiat's BB+ rating had been placed on CreditWatch with negative implications, citing an increased likelihood that the cash-draining Fiat Auto division will remain in the group. S&P affirmed its B short-term corporate credit and commercial paper ratings on Fiat and related entities.
"S&P believes this plan reduces the likelihood that Fiat will lower its participation in Fiat Auto as early as 2004," said S&P analyst Virginie Casin.
The rating agency said it had previously assumed that Fiat would exercise a put option to General Motors Corp. or otherwise reduce its stake in Fiat Auto, the main source of Fiat's consolidated negative free operating cash flows.
S&P said it aims to resolve the CreditWatch status on Fiat in the coming weeks. The review will focus on the extent to which the group's restructuring and financial measures will help offset the negative effect of continued Fiat Auto ownership, the rating agency said.