Creditreform Rating amended the corporate issuer rating of BMW AG, BMW Finance N.V. and the rating of the long-term currency (LC) senior unsecured issues from A + / negative to A / negative as part of the monitoring process during the year.
The main reasons for this are the current macroeconomic upheavals, which CRA believes are increasingly the result of the COVID-19-pandemic and could affect the BMW Group to a considerable extent. This is particularly the case considering the temporary plant closings and the associated production stoppages, which can lead to significant sales and earnings losses. The duration of the plant closings is currently not foreseeable. As part of its periodic reviews, CRA examines further negative implications on the net assets-, financial- and earnings position of the BMW Group.
Creditreform Rating has set BMW AG's unsolicited corporate issuer rating to A +. The outlook is negative and reflects the company's own expectations regarding a further decline in earnings for the 2019 financial year, which could also be confirmed in 2020. With the unsolicited corporate issuer rating, BMW AG continues to have a high level of creditworthiness and a low default risk. The operational and financial performance of the BMW Group is decisive for the rating assessment, which is satisfactory despite the deterioration in earnings quality, high levels of competition, technological change and capital intensity of the business. The BMW Group's long-established capital market capability has a stabilizing effect. The reduction in sales and the significantly declining annual result in 2018 have a negative effect on our rating assessment.
Creditreform Rating has set the unsolicited corporate rating of Deutsche Telekom AG to A+. The outlook is stable. The unsolicited A+ corporate rating attests BMW AG a high creditworthiness. Despite challenging market conditions we assume, that the company will assert its position in the global automotive market. Main factor of success is the good brand portfolio which is state-of-the-art in terms of quality and technology. Due to its financial strength we expect BMW AG to be well prepared to successfully shape the pending fundamental technological change in the automotive industry. On the other hand, those inevitable measures will probably cause income losses and higher indebtedness. In addition, economic and political uncertainties could have an adverse effect on the business.