finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

Rolls-Royce’s Credit Rating Cut to ‘Junk’ Status

Ratings agency Moody’s downgraded the UK engine-maker’s bonds by two notches, meaning they are no longer considered investment-grade.

Posted: 27th July 2020 by
Finance Monthly
Share this article

Rolls-Royce’s senior unsecured bonds are now rated as Ba2, down from their previous grading at Baa3. The company as a whole has also been rated at Ba2.

Moody’s reported the change in a statement on Monday, citing the impact of the COVID-19 pandemic on the aviation industry and warning that conditions could worsen.

“As a result of higher than previously expected cash outflows, Moody’s expects material increases in leverage, and considers that the company faces significant challenges to recover its metrics over the next two to three years,” the statement continued.

The announcement had an immediate impact on Rolls-Royce’s share prices, which had already lost two thirds of their value since the beginning of the COVID-19 pandemic. Following the release of the statement from Moody’s, prices fell a further 5.7% to trade at 253 pence as of 08:27 GMT.

Rolls-Royce CEO Warren East said on Thursday that the company was exploring options to strengthen its balance sheet but had not yet come to any decisions.

During the weekend, reports emerged that Rolls-Royce was planning to raise additional funds by selling off its ITP Aero division, which makes parts for the Typhoon fighter jet. In response to these reports, a Rolls-Royce spokesperson said that the company was reviewing a range of options. “Our current financial position and liquidity remain strong,” they added.

Earlier this month, Rolls-Royce claimed to have £8.1 billion on hand following the first-half outflow.

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram