Fitch Ratings cuts GM deeper into junk status
DETROIT (AP) — Fitch Ratings lowered General Motors' (GM) credit rating deeper into "junk" status Monday, saying the automaker has made little progress in reducing its high costs and is vulnerable if gas prices remain high.
Fitch first cut GM to junk or high risk, high yield status in May. The latest action, which applies to GM and finance arm General Motors Acceptance Corp., lowered the rating one more level to BB, or two levels below investment grade. Standard & Poor's and Moody's Investors Service have also cut the automaker's rating to junk.
The move will likely make it more expensive for GM to borrow and refinance debt. The automaker has about $136 billion of senior debt, or obligations with priority for repayment in a liquidation, and more than $100 billion of other debt, Fitch said.
Fitch said GM is at heightened financial risk because of ongoing restructuring talks with Delphi (DPH), its former parts division. Delphi is threatening to declare bankruptcy next month because it says its spinoff agreement with GM left it with unsustainable labor costs.
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