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NEW YORK - Moody's Investors Service on Wednesday cut its noninvestment-grade corporate family and probability of default ratings for Group 1 Automotive Inc. to "Ba3" from "Ba2," citing the effects of debt-financed acquisitions and share buybacks.
| GPI | 21.09 |  1.37 |
The outlook is negative, reflecting the ratings service's concerns that the automotive retailer won't be able to reduce the leverage resulting from the acquisitions and buybacks soon, Moody's said.
"In the event cash flows from 2007's acquisitions are sufficient to measurably reduce what could be a temporary spike in leverage, a stable outlook could result," Moody's Senior Analyst Charlie O'Shea said in a statement.
"However, if leverage is not materially reduced by the first quarter of 2009, Group 1's ratings could be downgraded further."
Group 1 shares rose $1.13, or 5.4 percent, to $22.10 in afternoon trading.
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