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Bond, junk bond? Aston Martin financial ratings go south as it awaits DBX

Ratings agencies Standard & Poor's and Moody's have taken a dim view of Aston Martin Lagonda. S&P cut its credit rating on the storied carmaker deeper into junk territory this week, and Moody's revised its credit outlook to "negative" after the company raised $150 million in debt from a bond issue at 12% interest, with the option to raise another $100 million at 15%. The Standard & Poor's rating was trimmed by one notch to 'CCC+', which reflects substantial risks and takes it close to default territory after a faster-than-expected cash burn this year. The outlook is negative.  The negative outlook reflects ongoing pressure on profits, a high cash burn, and very high leverage in the face of heightened risks linked to a potential no-deal Brexit and new tariffs on car imports threatened by the United States. The potential salvation for the company is its new DBX luxury SUV, the success of which is critical to its ambitious growth strategy and ongoing creditworthiness, S&P said. But Moody's noted that it's burning cash at a high rate as it nears the launch of the DBX. The British carmaker, known as James Bond's favorite marque, has been hit by falling demand in Europe, the Middle East and Africa. It slumped to a first-half loss in July. Chief Executive Andy Palmer said concerns around Brexit and U.S.-China trade relations were skewing the outlook to the downside, so it was prudent to address investor concerns about its balance sheet. "Taking this debt on — short-term debt — is we think the correct tool to completely remove that thesis that we don't have sufficient liquidity," he told Reuters. "In every substantial and material way, this ensures that we can get through to DBX in spite of what all of those global uncertainties might throw at us." The main tranche comprises notes with an interest rate of 12% due in 2022, while the additional notes could be issued under the same terms if permitted, or could be issued as unsecured notes with an interest rate of 15%, Aston Martin said. Shares of stock in the company, which have had a precipitous fall since they listed in London in October 2018 at 19 pounds, were trading down 5% at 545 pence in early deals. Broker AJ Bell said Aston Martin was known for its high end prices and that situation now also applied to its debt. "These rates are very high and are a major red flag that investors consider the car company to be a high risk entity," it said.

Mercedes F1 boss Toto Wolff takes a stake in Aston Martin

LONDON — Mercedes Formula One boss Toto Wolff has taken a stake in British sportscar maker Aston Martin, whose executive chairman Lawrence Stroll runs the Racing Point F1 team, according to company filings. A Mercedes F1 spokesman said Wolff's move was purely an investment on the Austrian's part and would be diluted by a rights issue on Monday from 4.77% to less than 1%. "Fully diluted following the pending rights issue, this investment will represent a 0.95% stake in the company," he added. "It is a financial investment and Toto's partnership and executive role with Mercedes are unaffected by the transaction." Swiss billionaire Ernesto Bertarelli has also bought a 3.38% stake which will be similarly diluted. Wolff previously had a 16% shareholding in former champions Williams but sold that after he joined the Mercedes team, where he serves as principal and owns 30%. Canadian billionaire Stroll, whose son Lance drives for Racing Point alongside Mexican Sergio Perez, is close to Wolff. The Silverstone-based team — to be renamed Aston Martin next year — use Mercedes engines and gearboxes. Mercedes-Benz's parent Daimler also has a small stake in Aston Martin. "It's clear that Aston are now Mercedes' B team," the Daily Mail quoted one Formula One insider as saying. Wolff's future at Mercedes has been the subject of some media speculation, with the 48-year-old linked variously to senior management roles with Liberty Media-owned Formula One and at Aston Martin. His Aston Martin shares were bought from Yew Tree Overseas Limited, a vehicle controlled by Stroll who acquired a roughly 25% percent holding in Aston Martin with a consortium of investors. Mercedes have won the past six Formula One drivers' and constructors' titles but have six times world champion Lewis Hamilton out of contract at the end of the 2020 season, which has yet to start due to the COVID-19 pandemic. Hamilton, who has also been linked to Ferrari, had told reporters before the global crisis changed the sporting and financial landscape that his decision would depend on Wolff's plans. The Briton is now expected to stay at Mercedes, with a radical overhaul of Formula One's sporting and technical regulations postponed to 2022. Related Video: Motorsports Aston Martin Mercedes-Benz

A high-performance Aston Martin DB11 is on the way

It was only a matter of time before Aston Martin prepped a hotter version of its DB11. The British Automaker did the same for the DB9 with the DBS, as well as the Vanquish, Rapide, and Vantage so a performance model Aston is as predictable as an AMG anything from Mercedes-Benz. And from the looks of it, this extra-potent DB11, which we'll call DB11 S, will follow the same formula of more power, and aggressive exterior upgrades. Most noticeable is the mega-sized maw at the front. There's a bit of white-painted mesh to break up the front grille, but it's still clear that the opening has expanded all the way down to the front spoiler. That spoiler has been changed as well, featuring points on each side instead of one big arch. Moving around to the side, the slender vent that extends from the wheel arch on the standard DB11 has been exchanged for something larger. It's shaped very differently as well, looking a bit like a shark's tooth or a Star Fleet badge from Star Trek. At the back is another significant change. The rear bumper now features a clearly functional diffuser for improved aerodynamics. Vents appear around the exhaust tips, too. However, the ducktail spoiler appears unchanged, as does the rest of the rear. There are a couple of interesting details inside as well. This prototype is fitted with Recaro race seats, which are pretty neat, but will likely be replaced with cushier, leather-wrapped seats developed by Aston. Just behind the seats is something even more fascinating. This DB11S has a roll cage. It's hard to say if this is just a one-off for the prototype, or if it will make it to production. Certainly other companies, such as Porsche, have offered roll cages in production cars. But in the case of Porsche, they've only been included on the most hardcore sports cars. However, we're not sure this Aston is the same type of track-focused car that Porsche's caged examples are. View 11 Photos As a bonus, we also have more photos of the upcoming DB11 Volante, due spring of next year. It's still sporting the '80s-grade shoulder pads to hide its haunches, but the rest of the car is pretty well exposed. Naturally, the little air scoop behind the rear quarter windows was lost with the switch to a soft top, but we expect everything under the fake steel panels will be very similar to the coupe, just like the rest of the car. Related Video: