VW’s Credit Rating Improves

The Volkswagen Group’s ability to repay debt has improved, according to UK-based credit rating agency Fitch Ratings.

The agency raised the VW Group’s debt outlook to stable, from negative. It also reaffirmed the Group’s BBB+ long-term debt rating.

Volkswagen had been rated at A, but with the 2015 dieselgate scandal it was lowered to BBB+. At the time, Fitch gave the Group a negative outlook. Now that the financial risks have largely been accounted for, Fitch saw fit to raise the rating.

“In particular, we believe that the group could accommodate several billion euros in additional fines and/or recall and repair costs and still sustain its current ratings,” said the rating agency in a statement. It also added that VW has shown “strong resilience” since 2015.

Fitch acknowledges that the risk of further lawsuits and the associated costs are, though. That likely means that the VW Group’s rating won’t improve in the near future.

Fitch is one of only four credit rating agencies recognized by the European Central Bank. Its rating can affect how easy it is for a company to borrow money.

Volkswagen has set aside $25 billion in the wake of the emissions scandal.

[source: Bloomberg]

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