Fiat SpA was placed under review for a possible downgrade in its credit rating by Moody's Investors Service after the carmaker said it will increase its stake in Chrysler Group LLC to 46 percent in the second quarter.

Moody's decision follows Fitch Ratings, which placed Fiat on "rating watch negative" on April 21, and Standard & Poor's, which confirmed a "negative outlook" for the Turin, Italy-based company's rating the same day, reported The Detroit News.

Fiat is "vulnerable to a drop-off in demand" in Italy and Brazil and is behind its peers in debuting new models in Europe, Falk Frey, an analyst at Moody's in Frankfurt, wrote in a note this week. The carmaker's "very limited geographic diversification" is a "key weakness," though that will improve with the addition of Chrysler, he said.

Fiat will pay $1.27 billion to reach a 51 percent stake in Chrysler as Chief Executive Officer Sergio Marchionne aims to gain control of the American automaker two years faster than planned. Fiat intends to increase the stake to 46 percent in the second quarter after completing refinancing needed for Chrysler to repay government loans, the Italian company said April 21. The remaining 5 percent will come from the U.S. government later this year as Fiat meets targets.

Standard & Poor's lowered its long-term corporate credit rating on Fiat to BB from BB+ in February after the carmaker spun off its industrial operations. Both ratings are below investment grade. The ratings firm said at the time it might downgrade Fiat again if it buys a majority stake in Chrysler in 2011.

Marchionne, who also runs the American carmaker, said earlier this month he has no immediate plan to list Ferrari SpA, which might be worth more than 5 billion euros ($7.3 billion), because Fiat has enough cash to increase its Chrysler holding.