Moody’s Cuts PSA Debt Rating

Moody's Investors Service has lowered its credit rating for PSA Peugeot Citroen by one notch to B1, four steps below investment grade.

Moody's says unless western Europe's auto market recovers strongly next year, PSA may be forced to take additional cost-cutting measures beyond its current restructuring plan. The agency adds that it was concerned by the company's cash outflow and greater-than-expected auto losses in 2012.

Moody's move matches the level Fitch Ratings assigned to PSA in February. Standard & Poor's Ratings Services places the company's credit one step higher.

CEO Philippe Varin tells German newspaper Frankfurter Allgemeine Zeitung that PSA no longer expects the market to turn around later this year. He says the company now predicts the region's sales to shrink 5% in 2013, at the bottom of its previous forecast range.