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GM Gets 1st Investment-Grade Rating Since ’05

But key debt rating agencies like S&P yet to follow.

by on Sep.14, 2012

GM's headquarters in Detroit.

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.

The Last Word!

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.


Ford Gets Another Upgrade

GM also gets a boost in its credit rating.

by on Oct.28, 2011

Ford boss Alan Mulally may soon get his wish for an investment grade credit rating.

Ford Motor Co. is a small step away from achieving one of CEO Alan Mulally’s key goals after the maker received another upgrade in its debt rating from Moody’s Investors Service – the agency also giving an upgrade to industry giant General Motors Corp.

Both makers are now rated at “Ba1,” which is for Mulally one step from seeing Ford regain the investment grade rating it lost in 2005 as its finances began to implode.  Getting the next upgrade would provide a halo for Ford’s stock, which has taken some sharp blows over recent months – but it would also reduce the maker’s borrowing costs substantially.

Upgrade Your Insight!

The upgrade by Moody’s follows similar actions by its rivals Standard & Poor’s and Fitch, earlier this month.  All three ratings agencies cited the improved financials for both Ford and GM, as well as the latest contracts the makers have negotiated with the United Auto Workers Union.