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CHRYSLER, CFC SENIOR DEBT UPGRADED TO 'BBB' FROM 'BB+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, July 27 /PRNewswire/ -- Chrysler Corp.'s and Chrysler Financial Corp.'s (CFC) senior debt ratings are raised to 'BBB' from 'BB+' by Fitch. In addition, CFC's commercial paper is raised to 'F-2' from 'F-3' and its subordinated debt to 'BBB-' from 'BB'. Chrysler's credit trend is improving, while CFC's is stable. The upgrade applies to $3.6 billion of Chrysler's senior debt, including $1.1 billion of Auburn Hills Guaranteed Exchangeable Certificates. CFC has $1.5 billion of outstanding commercial paper and $10.1 billion long-term debt. All of the debt of CFC is secured by the assets of the company on a pari passu basis.
 These upgrades indicate Fitch's confidence in Chrysler's commitment to fiscal conservatism and prudent balance sheet management. With these disciplines, as well as an improved business position, Fitch believes the company can sustain an investment-grade operating and financial profile throughout auto industry cycles. This commitment to business focus and continuous improvement permeates the enterprise, and marks a clear departure from past operating and financial practices, which resulted in highly variable performance.
 In a tough North American market, Chrysler has combined product success and a lower cost structure to restore solid profitability. This progress made possible the sale of $2 billion of new common equity earlier this year, with over half the proceeds used to reduce its unfunded pension liability. Even after the $4.7 billion noncash charge for FASB 106, equity is $5.3 billion and automotive debt leverage is a manageable 40 percent. Automotive cash and securities were $4.4 billion at March 31, 1993, compared with total debt of $3.6 billion. CFC's funding is in place for the next few years, lending confidence that it will be able to continue supporting Chrysler's new product sales.
 Chrysler Financial has sold most a substantial portion of its non- automotive assets but retains its strong retail and wholesale auto financing efforts. Through active securitization and asset sales, CFC has managed down its funding needs, and is starting to access the public capital markets again through commercial paper, long-term debt, and medium-term notes. It remains subject to tight covenant restrictions from the banks, which have not impaired its operations but have limited dividend flows from the company. As a result, CFC's balance sheet has very low leverage of 3.37 times (at March 31).
 Chrysler's continuing challenge is to maintain its hard-won cost and financial disciplines, to sustain new product success momentum in a mature, highly-competitive market, and to fund its remaining pension obligations. Successful new products will be critical in ensuring high operating rates, reducing breakeven points, and containing incentives. These will also support and diversify cash flows and enable Chrysler to protect funding for its new product programs, address remaining pension liabilities, and absorb escalating health-care costs. Debt and debt leverage should decline as retained earnings strengthen equity and scheduled debt maturities are paid.
 -0- 7/27/93
 /CONTACT: Mary Anne Sudol, CFA, 212-908-0562 or Nancy E. Stroker, CFA, 212-908-0533, both of Fitch/
 (C)


CO: Chrysler Corp.; Chrysler Financial Corp. ST: Michigan IN: AUT SU: RTG

WB -- NY021 -- 6132 07/27/93 10:07 EDT
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Publication:PR Newswire
Date:Jul 27, 1993
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