DBRS joins Finch and S&P in downgrading GM bond rating

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DBRS downgrades General Motors: 'still investment grade' - barely

Canadian Press

Thursday, May 26, 2005
TORONTO (CP) - Dominion Bond Rating Service downgraded General Motors Corp. and General Motors of Canada Ltd. on Thursday - stopping just short of assigning junk status to the world's biggest automaker as other rating agencies have recently done.

DBRS said GM is "still investment grade," while dropping its rating on the long-term debt of both the U.S. parent and Canadian subsidiary to BBB (low) from BBB.

The agency added that its outlook is negative; the next step down would give GM a speculative rating which would prevent investment in its debt by conservative institutional portfolio managers.

"The company's North American operating performance continued to be weak with declining shipment and market share," DBRS observed in its report.

"Although sales of new models are gathering momentum, they are not sufficient to stabilize GM's market share loss."

Among numerous other "worrying developments," the report cited sharp declines in sales of large sport utility vehicles and slowing sales of pickup trucks, GM's most profitable segments.

The company's finance arm, General Motors Acceptance Corp., had its long-term debt downgraded to BBB from BBB (high).

On the upside, DBRS said the forthcoming launch of GM SUVs and trucks based on the new T900 platform offers the company a potential lifeline.

"The brand-new large SUVs (in 2006) and pick-up trucks (in 2007) are GM's largest and most profitable products," DBRS said.

"The success of these vehicles may be able to mitigate the deteriorating performance at its North American operations."

GM's consolidated debt as of March 31 was $291.8 billion US, Standard & Poor's Ratings Services said earlier this month as S&P downgraded both GM and Ford Motor Co. to non-investment-grade status.

Fitch Ratings joined this week in cutting GM to junk status.

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No wonder nobody has posted on this. Old news we're tired of hearing.