Research Update: Cooper-Standard Holdings Inc. Downgraded To 'B-' On The Effects Of The Coronavirus Pandemic, Outlook Negative

The disruption to auto production stemming from the efforts to contain the coronavirus will add to the ongoing operational challenges facing Tier-1 auto supplier Cooper-Standard Holdings Inc. and lead it to generate negative free cash flow in 2020 while its EBITDA margins remain below 8% through 2021. Therefore, we are lowering our issuer credit rating On Cooper-Standard to 'B-' from 'B'. At the same time, we are lowering our issue-level rating on its senior secured term loan to 'B' from 'B+' and our issue-level rating on its unsecured notes to 'CCC' from 'CCC+'. Our '2' (rounded estimate: 75%) recovery rating on the term loan and '6' recovery rating (rounded estimate: 5%) on the unsecured notes remain unchanged. The negative outlook

...- The disruption to auto production stemming from the efforts to contain the coronavirus will add to the ongoing operational challenges facing Tier-1 auto supplier Cooper-Standard Holdings Inc. and lead it to generate negative free cash flow in 2020 while its EBITDA margins remain below 8% through 2021. - Therefore, we are lowering our issuer credit rating On Cooper-Standard to 'B-' from 'B'. - At the same time, we are lowering our issue-level rating on its senior secured term loan to 'B' from 'B+' and our issue-level rating on its unsecured notes to '###' from '###+'. Our '2' (rounded estimate: 75%) recovery rating on the term loan and '6' recovery rating (rounded estimate: 5%) on the unsecured notes remain unchanged. - The negative outlook reflects the at least one-in-three chance we will downgrade Cooper-Standard in 2020 if the recovery in its demand following the pandemic is weaker than we expect or the company's reliance on its credit facility increases meaningfully. This would cause...

Research Update