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Rating Action:

Moody's places Fiat's Ba1 ratings under review for possible downgrade;

21 Jul 2010

Frankfurt, July 21, 2010 -- Moody's Investors Service has placed Fiat S.p.A.'s ("Fiat") corporate family rating, rating (CFR) and all its instrument ratings under review for possible downgrade following the approval of its spin-off plans by the Board of Directors.

Falk Frey, Senior Vice President and lead analyst at Moody's for Fiat, commented: "Today's rating action was solely triggered by the approval of the demerger plan of Fiat's capital goods business and its possible impact on the remaining Fiat operations focusing on car business and related components businesses"

The review will focus on -- but not be limited to -- (i) the allocation of debt that must be served by the "new" Fiat and by Fiat Industrial (including CNH itself); (ii) the strategy of intercompany funding of current debt as well as future intercompany funding possibilities; (iii) the disposition of cash deposits that are currently pooled at Fiat level; (iv) the common usage of existing and future committed credit facilities as well as (v) any possible changes in Fiat's financial strategy and financial targets against the background of future growth and consolidation opportunities.

In Moody's view though the separation of Automotive businesses from Industrial may allow a better management focus on further building two world-class competitors with different business dynamics, the spin-off of Fiat Industrial will result in a weakening of Fiat's business profile compared to the present combined Fiat Group to the extent that it would reduce the scale and the diversification of each of the separate entities. Moody's also commented that the two new companies potentially emerging from the process could have different business profiles with separate industry dynamics.

On the other hand we recognize that in 2009 the auto business generated the majority of consolidated profits benefiting from government incentives in key European markets that came to an end largely and will result in a declining demand in Europe in the current year. In addition, Fiat Group Automobiles (FGA) published remarkable results for the second quarter and first half year 2010. Driven by an improved product mix, primarily related to light commercial vehicles, purchasing savings and a favourable impact from currency movements, FGA was able to improve trading profit by EUR30 million to EUR185 million in Q2 2010 compared to Q2 2009 despite a decline in deliveries of 6.2%. Moody's notes that today's rating action is not related to the Q2 results but solely related to the spin-off plans.

Moody's aims to close the review process within 3 months provided that details on the final capital structure and additional information on the points of our review focus listed above have been made available.

On Review for Possible Downgrade:

..Issuer: Fiat Finance & Trade Ltd.

....Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Ba1, NP

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1

..Issuer: Fiat Finance Canada Ltd.

....Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Ba1

..Issuer: Fiat Finance North America Inc.

....Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Ba1, NP

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1

..Issuer: Fiat S.p.A.

....Corporate Family Rating, Placed on Review for Possible Downgrade, currently Ba1

Outlook Actions:

..Issuer: Fiat Finance & Trade Ltd.

....Outlook, Changed To Rating Under Review From Negative

..Issuer: Fiat Finance Canada Ltd.

....Outlook, Changed To Rating Under Review From Negative

..Issuer: Fiat Finance North America Inc.

....Outlook, Changed To Rating Under Review From Negative

..Issuer: Fiat S.p.A.

....Outlook, Changed To Rating Under Review From Negative

The principal methodology used in rating Fiat was the Global Automobile Manufacturer Industry Methodology, which is available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Moody's last rating action on Fiat was a the downgrade of Fiat's corporate family rating to Ba1 with a negative outlook from Baa3 review for possible downgrade on February 23, 2009.

Headquartered in Turin, Fiat S.p.A. ("Fiat", rated Ba1/review for possible downgrade) is one of Italy's leading industrial groups and, with its Fiat Group Automobiles division, the fourth largest European-based automobile manufacturer by unit sales. Through its subsidiaries Iveco and Case New Holland ("CNH", rated Ba3/stable outlook), the company is also one of Europe's major manufacturers of commercial vehicles and among the world's leading producers of agricultural and construction equipment. Other major divisions include Fiat Powertrain Technologies (engines and gear boxes), Magneti Marelli (automotive components), Comau (production systems) and Teksid (metallurgical products). In 2009, the group's industrial operations generated revenues of €48.9 billion.

Frankfurt
Falk Frey
Senior Vice President
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Paris
Eric de Bodard
MD - Corporate Finance
Corporate Finance Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's places Fiat's Ba1 ratings under review for possible downgrade;
No Related Data.
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