Apollo Global Management has taken a short position against the debt of First Brands Group (FBG), a US auto parts supplier facing scrutiny over its accounting and financing methods. Apollo used a credit default swap that pays out if FBG fails to meet its debt obligations, according to sources familiar with the trade.
FBG, owned by businessman Patrick James, has grown rapidly through debt-funded acquisitions. The company recently halted a $6 billion loan deal after investors questioned its financial disclosures. In addition to $5 billion in loans, FBG has relied heavily on invoice factoring and supply chain finance, raising investor concerns about transparency.
Last month, FBG appointed Deloitte to conduct a “quality of earnings” review. Analysts said the company disclosed $2 billion in invoice factoring facilities but did not clearly state its supply chain finance exposure. The lack of clarity, combined with past fraud allegations against James that were later dismissed, has increased unease among credit investors.
The auto parts sector as a whole faces pressure from rising tariffs and its reliance on supplier financing. Moody’s recently warned that auto parts retailers remain the heaviest users of such facilities due to slow-moving inventory cycles.
