Constellation in negative Moody’s outlook
26 October 2022
Moody’s has changed a series of outlooks for Constellation Automotive Group from stable to negative. It blamed subdued demand due to a lack of new car volumes, and an underperforming used car market “leading to materially higher leverage well above Moody’s expectations”.
Profitability is at risk due to the recent capital-intensive pivot to produce ‘retail ready’ cars. Moody’s expects gross leverage to peak just above 10x by March 2023, up from 7.5x in the 12 months to April 2022.
“More positively, the company has time to improve performance and wait for demand to recover ahead of its first material refinance need in 2026.”
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