We expect Brazil-based cast iron components manufacturer Tupy to report improving credit metrics and strong liquidity thanks to the healthy demand for passenger and light commercial vehicles in international markets and thanks to its solid free operating cash flow generation (FOCF), allowing for debt reduction. We expect these factors to offset weak demand in domestic and international off-road markets in the next 12-18 months. We're affirming our 'BB-' global scale corporate and debt ratings and 'brA' national scale corporate credit rating on Tupy. The stable outlook reflects our expectation that the company will maintain its leading position among the iron blocks and heads manufacturers and gradually improve profitability through more value-added products and higher capacity use, despite somewhat weaker demand.
