GM's debt rating with Moody's was lowered to Baa3, one notch above what would be considered a non investment grade rating. This action impacts GM by raising it's borrowing costs. In fact, some holders must sell a non investment grade rated bond, no matter what the yield or spread over US treasury bonds and it lowers the potential purchasing audience for the same reason. GM is a widely held name, owned by in nearly every significant corporate bond portfolio. Spreads are 5.25% over treasury bonds for GM's 8.375% notes due in 2033, about 85 cents on the dollar to yield almost 10%. For what it's worth Ford is on review for the same action. Not easy being a domestic in a mature business.
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Re: GM's Debt Ratings lowered by Moody's
I'm shocked. -
Re: GM's Debt Ratings lowered by Moody's
It's unfortunate for sure but not totally unexpected. They have had ratings downgraded before but never this low. Already at BBB- with Standard & Poors, the other major ratings agency. You can get close to 7% on GM 18 month paper and their stock is yielding almost 7%, as long as the dividend holds. Credit Suisse First Boston is rating the stock a BUY to outperform. Let's hope they're right. Things can turn quickly, look at Chrysler a few years back. GM is way stronger financially, sitting on 50+ billion in cash and cash equivalents.Comment
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Re: GM's Debt Ratings lowered by Moody's
Does the General really think that Erector Set styling is going to improve there market share and status? Duh!Comment
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Re: GM's Debt Ratings lowered by Moody's
The only reason I would buy a US car ( except corvette)is because I am glad to be an American.They only compete on gas hog trucks. DonComment
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