Rating Upgrade Overview
Fitch Ratings on 28 August 2026 upgraded Garrett Motion Inc.’s long‑term Issuer Default Rating (IDR) from BB to BB+ and assigned a Stable Outlook. In the same announcement the agency raised the rating on the company’s senior unsecured notes to BB+ (from BB) and on its senior secured notes to BBB‑ (from BB+), while withdrawing all other ratings for commercial reasons.
Leverage and Financial Profile
The upgrade is driven by an improvement in Garrett’s EBITDA gross leverage, which Fitch projects to be 2.0 times at the end of 2026 following the company’s voluntary repayment of a portion of its term loan in the first half of 2026. Fitch expects the leverage ratio to stay around this level over its four‑year forecast horizon, supported by strong profitability and free‑cash‑flow generation.
At the end of 2025 Garrett held approximately $177 million of cash and had an untapped revolving credit facility of $630 million. Its capital structure consists of a $583 million seven‑year term loan and $800 million senior unsecured notes, both due in 2032.
Operating Performance
Adjusted EBIT margin for the second quarter of 2026 was 15.6 %, an increase of 200 basis points year‑on‑year, reflecting robust volumes, a favourable product mix toward commercial‑vehicle applications, and growth in industrial and aftermarket segments. Fitch forecasts the EBIT margin to remain in the 15 %–16 % range through 2029, underpinned by continued share‑of‑demand gains and higher contributions from commercial‑vehicle and industrial uses.
Business Mix and Growth Outlook
Approximately 30 % of Garrett’s revenue is derived from non‑auto industrial applications and aftermarket services, a proportion that Fitch expects to rise. The company is expanding its presence in industrial markets such as power generation, HVAC, air compression, and data‑center‑related backup power and cooling, with a sales target of more than $1 billion by 2030.
Outlook Summary
Fitch anticipates that the company’s leverage will stay near 2.0 ×, profitability will remain strong with EBIT margins of 15 %–16 % through 2029, and that the expanding industrial portfolio will contribute to revenue growth toward the $1 billion milestone by the end of the decade.