GM paper goes deeper into junk bond status
By TOM KRISHER
AP Auto Writer
DETROIT (AP) -- Fitch Ratings downgraded General Motors Corp.'s credit rating deeper into junk status Monday, saying the automaker faces headwinds in almost every direction and its liquidity could drop to ''minimum required levels'' within the next year.
The credit ratings agency said it reduced GM's issuer default rating one notch to ''CCC'' from ''B-.'' Both ratings are noninvestment, or junk, grade.
Fitch analyst Mark Oline said GM faces pressures from tightening credit in the U.S., weakening overseas sales, rising raw materials prices, continued sales declines in North America and the need for a large amount of capital spending to transform its lineup from trucks and sport utility vehicles to smaller, more fuel-efficient models.
''If industry sales stay flat in 2009 with a deeply depressed 2008, we do think that the revenue pressures that GM and the industry will face will likely be in excess of their ability to reduce costs,'' Oline said in an interview. ''So we do project that liquidity will continue to decrease, and the company's access to capital is severely limited by the conditions of the industry and the capital markets.''
On Friday, GM said it was drawing down the last $3.5 billion of a $4.5 billion secured revolving credit facility to add liquidity during ''uncertain times in the capital markets.''
(Continued here.)
AP Auto Writer
DETROIT (AP) -- Fitch Ratings downgraded General Motors Corp.'s credit rating deeper into junk status Monday, saying the automaker faces headwinds in almost every direction and its liquidity could drop to ''minimum required levels'' within the next year.
The credit ratings agency said it reduced GM's issuer default rating one notch to ''CCC'' from ''B-.'' Both ratings are noninvestment, or junk, grade.
Fitch analyst Mark Oline said GM faces pressures from tightening credit in the U.S., weakening overseas sales, rising raw materials prices, continued sales declines in North America and the need for a large amount of capital spending to transform its lineup from trucks and sport utility vehicles to smaller, more fuel-efficient models.
''If industry sales stay flat in 2009 with a deeply depressed 2008, we do think that the revenue pressures that GM and the industry will face will likely be in excess of their ability to reduce costs,'' Oline said in an interview. ''So we do project that liquidity will continue to decrease, and the company's access to capital is severely limited by the conditions of the industry and the capital markets.''
On Friday, GM said it was drawing down the last $3.5 billion of a $4.5 billion secured revolving credit facility to add liquidity during ''uncertain times in the capital markets.''
(Continued here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home