S&P Places TRW Automotive (TRW) on CreditWatch Negative

Standard & Poor's Ratings Services said today that it has placed all of its ratings on TRW Automotive Inc. (NYSE: TRW), including our 'BBB-' long-term corporate credit rating, on CreditWatch with negative implications.

"The CreditWatch negative placement follows ZF's announcement that it has reached a definite agreement to acquire U.S.-based auto component supplier TRW Automotive for €9.6 billion, plus the assumption of TRW's debt, in a fully debt-funded transaction," said Standard & Poor's credit analyst Nishit Madlani. ZF funded the transaction in fall 2014 with a committed and executed bank facility of €12.5 billion, including a newly arranged €1.5 billion revolving credit facility (RCF). We recently assigned our 'BB' long-term corporate credit rating to ZF Friedrichshafen, incorporating our view of the combined entity's business and financial risk profile under the proposed capital structure (for more info, see "Germany-Based ZF Friedrichshafen Assigned 'BB' Long-Term Rating Following Proposed Bond Issue; Outlook Stable," published April 10, 2015).

The CreditWatch negative placement reflects our expectation that we will equalize the ratings on TRW with our ratings on ZF when the transaction closes since we expect the combined entity to be less creditworthy than TRW's stand-alone operations under its existing capital structure.

When the acquisition closes, we will lower our corporate credit rating on TRW to 'BB' to match our rating on ZF before subsequently withdrawing it. We will also withdraw all of our issue-level ratings on TRW once the transaction is completed, likely in the first half of 2015, and all of TRW's outstanding debt has been repaid.

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