TRW Automotive Gets Moody's Debt Lift

NEW YORK (TheStreet) -- TRW Automotive's(TRW Quote) recent moves to refinance and restructure its debt load in the wake of the near-collapse of the U.S. car industry has paid off, at least according to Moody's(MCO Quote), the embattled debt-rating agency.

Moody's lifted TRW's corporate family and probability-of-default ratings to B3 from Caa1 -- though the newest rating is still below investment grade.

The agency's rationale for upgrading its view of TRW's debt? The company, hit hard along with all other auto-parts suppliers with the bankruptcies of General Motors and Chrysler, has improved its "operating performance after restructuring initiatives." Last week, TRW, which specializes in electronic crash-safety systems for cars, said it was able to swing to a profit in its latest quarter -- and surpass Wall Street expectations -- on the back of an aggressive round of cost cuts.

Further, Moody's said it believes that the global economy will strengthen enough in 2010 for auto production to see an upturn next year, as well.

"In the North American market, which accounts for about 30% of TRW's revenue, an expected 15% increase in new auto sales off the extraordinarily weak 2009 level should support improved auto parts demand," Moody's analyst Michael Mulvaney wrote in a research note.

Still, he cautioned that European markets will likely remain weak -- TRW derives about 56% of its sales from Europe -- and that the company could be hurt by any continued deterioration in the global market share of GM and Chrysler. As of 2008, TRW relied on Detroit's Big Three for some 23% of its revenue, Mulvaney noted.