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Bond, junk bond? Aston Martin financial ratings go south as it awaits DBX

Ratings agencies Standard & Poor's and Moody's have taken a dim view of Aston Martin Lagonda. S&P cut its credit rating on the storied carmaker deeper into junk territory this week, and Moody's revised its credit outlook to "negative" after the company raised $150 million in debt from a bond issue at 12% interest, with the option to raise another $100 million at 15%. The Standard & Poor's rating was trimmed by one notch to 'CCC+', which reflects substantial risks and takes it close to default territory after a faster-than-expected cash burn this year. The outlook is negative.  The negative outlook reflects ongoing pressure on profits, a high cash burn, and very high leverage in the face of heightened risks linked to a potential no-deal Brexit and new tariffs on car imports threatened by the United States. The potential salvation for the company is its new DBX luxury SUV, the success of which is critical to its ambitious growth strategy and ongoing creditworthiness, S&P said. But Moody's noted that it's burning cash at a high rate as it nears the launch of the DBX. The British carmaker, known as James Bond's favorite marque, has been hit by falling demand in Europe, the Middle East and Africa. It slumped to a first-half loss in July. Chief Executive Andy Palmer said concerns around Brexit and U.S.-China trade relations were skewing the outlook to the downside, so it was prudent to address investor concerns about its balance sheet. "Taking this debt on — short-term debt — is we think the correct tool to completely remove that thesis that we don't have sufficient liquidity," he told Reuters. "In every substantial and material way, this ensures that we can get through to DBX in spite of what all of those global uncertainties might throw at us." The main tranche comprises notes with an interest rate of 12% due in 2022, while the additional notes could be issued under the same terms if permitted, or could be issued as unsecured notes with an interest rate of 15%, Aston Martin said. Shares of stock in the company, which have had a precipitous fall since they listed in London in October 2018 at 19 pounds, were trading down 5% at 545 pence in early deals. Broker AJ Bell said Aston Martin was known for its high end prices and that situation now also applied to its debt. "These rates are very high and are a major red flag that investors consider the car company to be a high risk entity," it said.

Aston Martin wants to be the Hermes of the car world

Aston Martin doesn't want its wealthy potential customers to perceive the brand as just another sports car maker. The company wants to transform those perceptions so that buyers see its products as luxury goods on par with high-end accessories. If this change can successfully bring in more cash, the business could consider an initial public offering in the coming years. "We seek to position ourselves as the automotive equivalent of Hermes, not as the counterpart of Ferrari." CEO Andy Palmer explained the change to Bloomberg, referencing the boutique French brand. The desire to change buyer impressions comes as Aston Martin pivots away from a focus predominantly on sports cars and more towards high-performance luxury vehicles. For example, the company already has sedans in the lineup like the Rapide and Lagonda Taraf. The future range will also reportedly include an electric Rapide and another Lagonda. The production version of the DBX crossover (concept above) will add one more segment around 2019. However, Aston Martin won't completely abandon coupes because the DB11 will arrive in 2016, and a new Vanquish and Vantage will eventually follow. For Aston Martin to have a future, Palmer believes the company needs to look in new directions, especially with models like the DBX. According to Bloomberg, execs there hope that appealing to more customers could help the business see a net profit in the next three years, which hasn't happened since 2010. To save even more money going forward, the business recently cut 15 percent of its workforce mostly from white collar employees. Featured Gallery Aston Martin DBX: Monterey 2015 View 16 Photos News Source: BloombergImage Credit: Copyright 2015 Drew Phillips / AOL Aston Martin Crossover Luxury Performance Sedan aston martin rapide aston martin lagonda aston martin dbx

Aston Martin's project 003 could have a name: Valhalla

When Aston Martin unveiled the Valkyrie at the 2017 Geneva Motor Show, the carmaker's chief designer told Drive, "We have a bunch more V names that we've thought of and haven't used." Earlier this year, AutoGuide discovered a trademark application for the name Varekai, which Aston Martin will use for its crossover. Now the same site has found another trademark application at the with World Intellectual Property organization, this time for Valhalla, which it expects to be applied to the "Son of Valkyrie," formerly known as 003. The automaker made the filing on October 12, 2018. If you're unclear on all the connections, the Valkyrie was codenamed AM-RB 001, denoting the first collaboration between Aston Martin and the Red Bull Racing Formula 1 team. The Valkyrie AMR Pro was AM-RB 002. That makes the Valhalla, nee 003, next in the chute. The naming inverts Norse myth, since the legends say Valkyries escorted fallen warriors to the Hall of the Slain in Valhalla. In Aston Martin's working, you need to go through Valhalla to get to the ferocious women with the swords. Although not thought to be co-developed with Red Bull Racing, the Valhalla will retain lightweight, carbon-fiber-intensive construction and active aerodynamics like its larger siblings, as well as an active suspension. As a road-legal and more practical step below the Valkyries, the Valhalla includes "space for luggage," and a quieter cabin. Instead of a naturally-aspirated V12, the third member of the family goes with a turbocharged V6 with hybrid help. Anticipated to be a full-on hypercar, the competitive set is thought to include the McLaren Speedtail and whatever succeeds the Ferrari LaFerrari. Aston Martin will make 500 Valhallas, deliveries commencing in late 2021. Before then, don't be surprised to see the Vanquish name return on the company's Ferrari 488 and McLaren 720S challenger. Related Video: