Fitch Ratings communicated yesterday that it has raised its rating on Fiat’s long-term debt by two notches from "BB" to "BBB-" while the short-term rating was also raised from "B" to "F3", with outlook as 'stable'. Achieving the investment-grade "BBB-" rating is a significant boost to Fiat Group and demonstrates that the recovery plan and defined strategy up to 2010 as set out by CEO Sergio Marchionne has been accepted by a key player in the wider investment community.

The Fiat Group Board of Directors met yesterday in Turin to amend certain provisions of the By-laws in order for them to comply with the new regulatory provisions issued by Consob on May 3rd and Marchionne released a brief statement after the meeting to convey his satisfaction with the re-rating of Fiat's debt by Fitch. "We are extremely satisfied with Fitch’s decision to raise Fiat’s rating by two notches and bring it back to the investment grade level as this decision rewards the speed at which the Group was able to realise its profound change," he said, adding that "this further strengthens our commitment and determination to achieve ever more ambitious targets and receive similar recognitions from the entire financial community."

"Consistent improvement in Fiat Auto in particular, and the continuously positive trend shown in the group's other main divisions, have enabled Fiat to materially strengthen its financial profile," said Fitch in its report released yesterday. Fitch Ratings is a leading global rating agency committed to providing the world's credit markets with independent, timely and prospective credit opinions; it is built on a foundation of organic growth and strategic acquisitions.
 

Fitch reckons that the Fiat Group will be able to meet the short-term revenue and operating profits that have been set for the full year this year, and do so again in 2008, leading to the agency offering it a 'stable' prospect outlook.

Fitch Ratings, which has grown rapidly during the past decade gaining market presence throughout the world and across all fixed income markets, is dual-headquartered in New York and London, operating offices and joint ventures in more than 49 locations and covering entities in more than 90 countries, including insurer financial strength ratings on over 2,000 insurance companies.  Fitch Ratings is a majority-owned subsidiary of Fimalac, S.A., an international business support services group headquartered in Paris, France.

However Fitch was cautious about the ambitious targets that Fiat has set for 2009, and the final year of its current plan, 2010, believing the targets to be reasonably ambitious. The agency added that Fiat's brand image has recently improved, although perceptions of reliability and quality don't match those of the Italian carmaker's rivals yet. "In addition, Fiat Auto's sales are more skewed towards its home market than its main competitors and it is highly dependent on two main markets, Italy and Brazil," the report said.