GM deeper into junk status

[desmo9]

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.

continued here:

http://www.usatoday.com/money/autos/...-gm-debt_x.htm

[desmo9]

$236 billion in debt, and counting ???

[01cavalier]

I sure hope they are working on this, their status as junk makes borrowing money so much more expensive, a cost they sure dont need!

[goblue]

Originally Posted by 01cavalier

I sure hope they are working on this, their status as junk makes borrowing money so much more expensive, a cost they sure dont need!

The only thing that will fix this is profitability. By lowering costs through whatever means, you in effect get a double benefit becasue the investment grades will rise. I hope the UAW is watching this. When you're bonds are junk, I don't know why one feels entitled to increases in pay - when you have 0% chance of getting the same pay and benefits anywhere else, at any other equivalent job.

[likearock00]

Can you tell this is an american company? Only in America can you be neck deep in debt and still keep writing checks. I think our government must have been required to attend GM school before they were allowed to run for election!

[paul8488]

Originally Posted by desmo9

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.

Not sure I understand business well enough. Wasn't the point of spinning-off Delphi to... I don't know... spin them off?!? How is it GM will be responsible for Delphi debt?

[desmo9]

Originally Posted by paul8488

Not sure I understand business well enough. Wasn't the point of spinning-off Delphi to... I don't know... spin them off?!? How is it GM will be responsible for Delphi debt?

Because the UAW made GM agree to this "safeguard" in the event that Delphi didn't make it. And let's face it, like Ford and Visteon, GM spun off all the shoddy, unprofitable business lines. Unlike Visteon, whose employees remained paid by Ford, GM saddled Delphi with uncompetitive labor costs to cover on its own. Further, all the people who had been GM employees for years were suddenly told to go it alone, and with these disadvantages. To do so, Delphi either needed to be less-shackled, or GM needed to attach a lifeboat to the Delphi ship when it set sail.

[mbukukanyau]

I love UAW, despite the fact that Delphi will go under and take their jobs with it, they will not negotiate. They insist, that Delphi can take cuts elsewhere…
If UAW has the same silly union rules about breaks and seniority (which means you sit down and do nothing but get paid if you are ‘senior in the union’) that I saw at a sony factory in san diego (now closed and moved to mexico,) I do not think there is hope..
UAW will blame republicans and capitalists if they loose their jobs. They will vote for Gephart

[zaxxis]

Originally Posted by likearock00

Can you tell this is an american company? Only in America can you be neck deep in debt and still keep writing checks. I think our government must have been required to attend GM school before they were allowed to run for election!

Yeah, we all know that Nissan quit writing checks when they were in the red a few years back.

It's not limited to American companies. All companies do this.

[asim]

You can get deeper? Wow this is getting bad, real bad.

[mbukukanyau]

It seems GM is headed the AT&T route.. and these unions do not care…
Poor Americans…The same unions are the ones that want the government to pick up the Medicare tab.. Essentially that means, you pay for lazy bums for there Medicare costs and also transfer more power to bureaucrats who will take control of doctors income and essentially discourage locals from joining the profession, that will lead to an influx of Indian and African doctors, while American doctors set up their own private practices for the rich…

[goblue1999]

The UAW doesn't believe these reports, they believe that all of the financial ratings agencies are in bed with GM, and that this is "smoke and mirrors" designed to break Organized Labor.

The Union deserves big raises and lifetime healthcare and employment guarantees, its the American way.

I hereby suspend the laws of economics, GM can run a deficit forever, the shareholders won't mind, buy back Delphi to complete the sweep.

[CRBoyd91]

The Unions are highly Democratic. Which in turn they are trying to mae our country more and more Socialist. This isn't good for ANY company. If the UAW doesn't calm down, they have no jobs.

[camaro chris]

seems like now would be a good time to invest in GM. with thier new products coming out soon they can only go up from here.

[Ming]

I'm starting to think that the "B" word is the only way out of this mess for GM, from which it can emerge a much stronger company, since its product is solid and strong now.