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FMCC is the captive finance unit of Ford Motor Company, the #2 North American light vehicle producer and #6 globally. FMCC provides retail and dealer financing with 77% of receivables in the Americas segment, 37% in the European segment, and 28% in Asia Pacific. FMCC owns FCE bank for funding activities in Europe. FCE Bank is a UK-based and FCA-regulated bank with subsidiary operations in 14 countries. FMCC has an agreement with FCE to maintain a net worth minimum of $500 mn (no payments were made under that agreement from 2001 to 2015). Auto captive finance companies historically had much weaker "support" agreements (including in some cases no explicit support agreement) than those in place at other manufacturing captives (e.g. strong agreements at Caterpillar, Deere, PACCAR). FMCC offers bondholders a limited "Relationship Agreement" which requires a capital contribution if "managed leverage" (as defined) exceeds a metric of 11.5 to 1 for Debt/Equity. Managed leverage is computed and disclosed each quarter and stood at 8.0:1 as of 4Q17, well inside the limit set by the Relationship Agreement. (17 Apr 2018)

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GM: Secular Shifts or Cyclical Positioning

Company Analysis: 27 Nov 2018, 5:05 AM ET - GM’s restructuring announcement is reflective of secular product shifts away from cars. GM’s expected payback on the restructuring costs is impressive, and Ford is now even under even more pressure to provide details on its Fitness Plan. 

ESG and Automotive: Ratings and Methodology

Sector Analysis: 14 Nov 2018, 10:23 PM ET - In this piece we discuss our ESG Ratings framework as it pertains to the Automotive sector. We use a total of 13 distinct measures to score each of the 3 ESG parameters and then weight them individually.

October 2018 US Company Recommendation Changes

US Company Recommendation Changes: 31 Oct 2018, 10:03 PM ET - Our monthly report provides executive summaries for the twenty-eight company recommendation changes made on North American companies during the month of October.

FCA 3Q18: Inching towards IG?

Earnings Note: 30 Oct 2018, 10:10 PM ET - FCA is struggling with the challenging market environment alongside its auto-OEM peers, but continues to perform well and improve its balance sheet strength as it inches closer to IG ratings.

LKQ 3Q18: Focus on Delevering, New Share Buyback

Earnings Note: 25 Oct 2018, 7:44 PM ET - LKQ reported further margin pressure and lowered its FCF guidance, and announced a share buyback program. But deleveraging the balance sheet still remains a focus at LKQ as well.

Ford/Ford Credit: Underperform

IG Note: 25 Oct 2018, 4:22 AM ET - Ford 3Q18 results, on balance, were better than expectations, and the company even reaffirmed its FY18 EPS guidance. However, Ford pulled their 2020 8.0% margin and ROIC target, and comments around IG ratings were not overly convincing. 

China Autos: Slowing Demand Concerns

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IG Note: US Autos Underperformance – Long End Pain

IG Note: 15 Oct 2018, 3:49 AM ET - Autos is the worst performing IG Sector in the YTD18 period, with the long end bonds of Ford and GM driving the underperformance. 

GM Motor Company: Buy New Issue

IG Note: 05 Sep 2018, 11:59 AM ET - We remain positive on GM given its positioning relative to the BBB index and newly downgraded peer Ford. We view the new issue concession at IPT levels as attractive and would remain buyers even at the curve.

Ford/Ford Credit: Moody’s Downshifts Ratings

Worth Watching: 30 Aug 2018, 12:38 AM ET - Ford/Ford Credit: Moody's downgraded credit ratings on Ford and Ford Credit one notch to Baa3 with a negative outlook and that follows S&P negative outlook last month. Moody's now rates both Ford and GM at the lowest investment grade rating alt ..

US IG Chart of the Day: The 50 Most Traded Names

Strategy Analysis: 09 Aug 2018, 9:05 AM ET - With declining market liquidity another hot topic, today we look at which names are most often traded. 

Delphi Technologies: Softer Outlook, Move To M/P

Earnings Note: 08 Aug 2018, 9:34 PM ET - Delphi reported a softer-than-expected of 2Q18 results and downwardly revised its FY18 guidance outlays. We view further credit metric improvement as limited over the near-term and, accordingly, move to M/P.

Cooper Tire: 2Q18 | Muted Outlook

Worth Watching: 06 Aug 2018, 10:29 PM ET - Cooper Tire (B1/BB) recorded modest 2Q18 results, reporting both top and bottom line contraction for the second consecutive quarter. The firm saw revenue fall 3.1%, driven primarily by lower tire volumes as well as the impact of weaker price an ..

Ford Motor Credit: 3Y and 7Y Issuance

IG Note: 06 Aug 2018, 10:33 AM ET - Ford Motor Credit is in the market this morning with 3Y fixed and floating rate notes as well as a 7Y fixed offering. We are now market perform at the parent level, but remain constructive on the fundamental strength of FMCC.

Cooper-Standard: 2Q18 | Mixed Performance

Worth Watching: 01 Aug 2018, 11:58 PM ET - Cooper-Standard (B1/B+) reported an all-time high for second quarter sales, but a weaker than expected volume mix and unstable market conditions impacted its bottom line. The company saw modest 2.1% revenue expansion, improving to a quarterly h ..

Meritor: 3Q18 | Keep on Trucking

Worth Watching: 01 Aug 2018, 11:57 PM ET - Meritor (B2/BB-) recorded healthy growth in its third quarter, despite the unfavorable impact of rising commodity costs. Sales were up 22.7% YoY, to $1.1 bn, driven by higher production across the board, and one of the highest North American ma ..

July 2018 US Company Recommendation Changes

US Company Recommendation Changes: 31 Jul 2018, 9:39 PM ET - Our monthly report provides executive summaries for the thirty-nine company recommendation changes made on North American companies during the month of July.

Autoliv: 2Q18 | Moving Forward

Worth Watching: 30 Jul 2018, 12:27 PM ET - Autoliv (A2/A-) reported steady growth in its second quarter despite rising raw material prices against the backdrop of rising trade tensions. Consolidated sales grew 11.5% to $2.2 bn, driven by a 4.2% positive impact stemming from currency tra ..

Tenneco: 2Q18 | Margins Pressured

Worth Watching: 29 Jul 2018, 10:40 PM ET - Tenneco reported strong second quarter results, recording top line expansion and still healthy bottom line performance. For the quarter, TEN's value-add revenue increased 8.0% (+6.0% constant currency), to $1.92 bn, supported by healthy growth ..

BorgWarner: 2Q18 | Steady Ahead

Worth Watching: 26 Jul 2018, 11:27 PM ET - BorgWarner (Baa1/BBB+) delivered a strong second quarter performance despite weaker than expected industry volume. The firm reported revenues of $2.69 bn, a 12.7% increase compared to the second quarter of 2017 (+7.3% organic). The expansion oc ..

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