Fitch Ratings on Monday upgraded American Axle & Manufacturing Holdings Inc., citing cost cuts at the auto parts maker and rising production at its main client, General Motor Co.
The credit ratings agency raised the company's issuer default rating to "B'' from "B-". It remains a non-investment grade stock. Fitch did upgrade other ratings as well, however, including the company's senior secured bank facility and its senior secured and unsecured notes.
The upgrades affect $1.2 billion in debt held by the Detroit-based maker of vehicle drivetrain and chassis systems, Fitch said.
American Axle shares rose 12 cents to $9.26 in afternoon trading, with credit for the company potentially costing less due to the ratings bump.
Fitch said American Axle's credit profile has improved because of cost-cutting efforts, such as suspending its dividend and reducing fixed costs by 50 percent. In addition, factories owned by GM, its largest customer, have raised production over the last year as the market for new vehicles improves.
Fitch also said the company is diversifying its sales in the near term and has seen increased backlog in markets outside the U.S., where most of its customers are located.
American Axle posted a first-quarter profit of $16.3 million in April, reversing a year-ago loss. The company is scheduled to report second-quarter results on Friday.
