PARIS: Credit rating agency Standard & Poor's (S&P) delivered downgrades on Thursday to France's top car companies Renault and PSA , cutting Renault's bonds to 'junk' status due to the impact of the new coronavirus.
S&P downgraded Renault to 'BB+/B' from 'BBB-/A-3', meaning it had ascribed a "junk bond" status to those Renault corporate bonds.
"French automaker Renault has an ample liquidity cushion and can, in our view, count on guarantees from the French state," S&P wrote in a research note.
"We nevertheless expect Renault's earnings, free cash flow generation (FOCF), and financial position to weaken materially in 2020, following an already challenging 2019," added S&P.
S&P kept a BBB- rating on Peugeot-company PSA, but it cut its outlook on PSA to "negative" from "stable".
Shares in Renault and PSA were both down by around 1per cent in late session trading.
Data earlier this month showed that French car registrations had dropped by more than 72per cent in March due to the coronavirus outbreak and lockdown ordered by authorities to fight the epidemic spread.
(Reporting by Sudip Kar-Gupta; Editing by Steve Orlofsky)