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MBSA-Guarantor Credit Rating Updates
Mercedes-Benz South Africa Limited (Incorporated in the Republic of South Africa) (Registration No.
1962/000271/06)
Bond Issuer code: MEC
(“Mercedes-Benz” or “the Issuer”)
Credit Rating Update by S&P, Moody’s and DBRS Morningstar
Noteholders are advised that S &P has lowered the credit rating of the Issuer’s Guarantor, being
Daimler AG (“Daimler”) to ‘A-‘ from ‘A’.
The rating action is attributable to Daimler’s exposure to multiple headwinds, including execution
risks on its ambitious cost-restructuring program, geopolitical risks on global trade, diesel-related
litigation, and challenging carbon dioxide (CO2) regulatory targets in Europe.
The negative outlook reflects the negative outlook we have on the industry. More specifically, we
believe there is some likelihood that Daimler will be unable to return its EBITDA margin to more than
10% over the next two years. In addition, in 2021 it could fail to return automotive free operating
cash flow (FOCF) to more than €4 billion, which we view as commensurate with the rating.
Detailed information may be accessed through the following link:
www.spglobal.com/ratingsdirect
Moody’s Investor Service (“Moody’s”) has downgraded the Daimler’s long-term ratings to A3 from
A2 and it’s short term ratings to Prime-2 from Price -1, while the outlook remains negative. Falk Frey,
a Senior Vice President and lead analyst for Daimler has stated that the downgrade to A3 was
triggered by Daimler’s significantly reduced guidance for it’s earnings outlook for the period 2020-
2022 that will be further burdened by restructuring provisions and cash needs for the planned
redundancy programme over the same period.
Detailed information regarding the rating action may be found on the below link:
http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1174796
DBRS Limited (DBRS Morningstar) has confirmed Daimler’s AG (Daimler or the Company’s) Issuer
Rating and Senior Debt rating at A. DBRS Morningstar changed the trend on the long-term ratings to
Negative from Stable and maintained the trend on the short-term ratings at Stable as, pursuant to
DBRS Morningstar’s debt rating scales, the R-1 (low) rating maps consistently with both the “A” and
A (low) long-term ratings. The rating confirmation incorporates the Company’s solid business risk
assessment as a global leader in both the premium automotive and truck segments. The trend
change on the long-term ratings reflects Daimler’s recently weaker earnings that have adversely
affected credit metrics. Moreover, the Company faces structural headwinds in its core automotive
business that could further undermine future operating performance such that Daimler’s financial
risk assessment would no longer be compatible with the current ratings.
Detailed information regarding the rating action may be found on the below link:
www.dbrs.com
Centurion
20 December 2019
Debt Sponsor: The Standard Bank of South Africa Limited
debtsponsor@standardbank.co.za
Date: 20-12-2019 02:05:00
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