General Motors’ ongoing turnaround effort got a significant endorsement today as it got its first debt upgrade to investment grade from Toronto-based ratings agency DBRS.
The big ratings agencies have yet to follow, though several have recently indicated their belief that GM is moving in the right direction and could follow the move by DBRS. An upgrade by ratings agencies like Moody’s and Standard & Poor’s, in particular, could significantly lower the automaker’s borrowing costs while also coaxing investors to drive up GM’s sagging stock price.
Today’s announcement was particularly significant in light of the ongoing problems General Motors has been having in Europe, where it is expected to lose in excess of $1.5 billion for all of 2012 – going into the red for the 14th consecutive year. That recently prompted analysts at Morgan Stanley to forcefully recommend GM get rid of its German-based Opel subsidiary.