ABB shares hit by downgrade
Shares in ABB have dropped sharply after the Moody's credit rating agency downgraded the beleaguered Swiss-Swedish engineering giant on Tuesday.
ABB closed down 6.6 per cent at SFr12 on Tuesday following the downgrade of the company’s senior debt from Baa2 to A3. Moody’s also lowered the company’s ratings for short-term debt from Prime-2 to Prime-3 on Monday.
The lower share price, which was at SFr33.35 in May last year, has made the markets nervous as ABB will now face higher debt-servicing costs.
Analysts expect the Standard & Poor’s rating agency also to downgrade ABB. “We appreciate the need of the financial markets for clarity,” said the company’s spokesman, Thomas Schmidt.
However, while bankers worried stock market traders enjoyed the volatility of the share price.
“ABB was good to trade. We didn’t have customer orders. I just traded ABB back and forth all day,” said one trader.
The company is expected to meet with its banks, Credit Suisse First Boston and Citigroup, to discuss terms for a SFr5 billion ($3 billion) credit facility.
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