Fitch Ratings expects to assign a rating of ‘A-’ to Harley-Davidson Financial Services, Inc.’s (HDFS) expected $600 million three-year medium-term note issuance. The proceeds of the debt issuance are expected to be used for general corporate purposes. HDFS’s long- and short-term Issuer Default Ratings (IDRs) are not expected to be affected by the issuance of these debt securities as the company’s pro forma leverage metrics are consistent with similarly rated captive finance peers. HDFS is the captive finance subsidiary of Harley-Davidson, Inc. (HOG), a manufacturer of motorcycles.
The IDRs and senior debt ratings for HDFS are linked to those of its
parent, as Fitch believes HDFS is core to HOG’s overall franchise.
HDFS’s ratings reflect its close operating relationship with HOG, which
is governed by a support agreement in favour of debt holders under which
HOG must maintain HDFS’s fixed charge coverage ratio at 1.25 times (x)
and minimum net worth of $40 million.
On July 20, 2012, Fitch upgraded the long-term IDRs of HOG and its
subsidiaries, HDFS and Harley-Davidson Funding Corp. (HDFC) to ‘A-’ from
‘BBB+’ with a Stable Rating Outlook. The upgrades reflect the
motorcycle manufacturer’s leading position in the U.S. heavyweight
motorcycle segment, robust cash liquidity position, high EBITDA margins
and low operating company leverage.
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(Motor Sports Newswire)
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