The streamlining of Harley-Davidson’s financial subsidiaries, effective from 1 January 2013, has received tacit approval from leading ratings agency Standard & Poor’s (S&P).
Harley-Davidson Funding Corporation (HDFC), a vehicle through which Harley raises debt via fixed-period bond issuances for general corporate finance purposes, is to disappear by being merged into Harley-Davidson Financial Services (HDFS), its mainstream provider of point-of-sale consumer credit and dealer inventory finance in the US market. HDFS will now become the bond issuer.
S&P says that an A-2 short-term rating on Harley’s £833m commercial paper programme, which delivers a revolving credit facility, is unaffected by the company’s plan to roll up HDFC into HDFS. All other S&P ratings on Harley, including its BBB-plus corporate credit rating, remain unchanged too.
It adds that the company’s long-term rating outlook is positive, with a business risk profile regarded as satisfactory and a modest financial risk profile, according to standard S&P criteria. Furthermore, S&P takes the view that while Harley still relies on securitisation to underpin its lending at retail level, diversity of funding has lessened this dependency.