By on September 25, 2013

 

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In another sign that largest American automaker has come back from its 2009 bankruptcy, for the first time since 2005, a credit rating firm has judged General Motors’ corporate debt to be investment-grade. On Tuesday, Moody’s Investors Service raised GM’s rating to Baa3 from Ba1. Baa3 is Moody’s lowest rating that it considers worthy of investment.

 

Moody’s cited GM’s new product  in the United States, its strength in China,  and management’s commitment to keeping a strong balance sheet. ”We think that the disciplines the company has embraced, combined with the strength of its U.S. product portfolio and a healthy domestic market, will enable it to stay on that path,” Bruce Clark, a senior vice president at Moody’s, said in a statement cited by The Detroit Free Press and praised, GM’s “steadily improving operational and financial trajectory.” Aggressive pricing by Japanese automakers and losses in Europe were cited as possible risks

Standard & Poor’s and Fitch, the other major ratings agencies continue to rate GM’s debt as junk bonds, though both firms recently raised their projections for the automaker from stable to positive.

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13 Comments on “Moody’s Upgrades GM Credit Rating To Investment Grade...”


  • avatar
    jaybird124

    Kudos to GM. Although I take the rating with a grain of salt. The crash taught us that the credit rating agencies aren’t exactly independent and their ratings can be grossly inaccurate.

  • avatar
    gmichaelj

    Over the years, I have noticed an attitude of shame in most of the articles I’ve read about big companies losing or not being investment grade (status)

    I think lost in these discussions on “investment grade” is that the overwhelming majority of borrower/lender relationships are NOT investment grade. This would include most bank loans.

    Granted, a company as large, and hopefully as stable, as GM should be investment grade, but the only magic that happens at BBB is that banks and other institutions with similar investment rules are allowed to invest in higher grade debt. This makes new debt easier to sell and thus more liquid and thus cheaper for the issuer (borrower)

  • avatar
    Car Ramrod

    By the time the ratings agencies publish, nearly everybody always knows. GM priced a very large debt offering yesterday at a price cheaper than the average industrial company of ‘BB’ credit quality, and found a very willing market for $4.5B in bonds.

  • avatar
    morbo

    And a sucker is born every minute

  • avatar

    and then there is that darn US Market Share thing…

  • avatar
    Beerboy12

    This is not too much of a surprise. GM are clearly going up and that is a great time to invest.

    • 0 avatar
      Da Coyote

      Until GM falls back into the “we need more MBAs and can make do with only one real engineer” mode.

      Then they’ll go bankrupt again, and the gubmit will again screw the investors to pay off the unions.

      Sorry, not now, not ever…will any of my money go to Gubmit Motors. (Yup, I know, a lot of it did in taxes…and that’s gone down the Obamahole.)

      • 0 avatar
        morbo

        I despise GM more than the average person, but let’s get our facts straight. W had to the power to kill GM. He knew Obama would save it once he took office in Jan 2009. GM was days away from execution and a real Chapter 11 in early December 2008. The first week of December 2008, the Senate killed an auto bailout bill. On Dec 11, 2008, W extended $13 Billion of our tax dollars, immediately and without precedent, to GM and Chrysler, so he wouldn’t be known as the president that killed Detroit and American auto manufacturing.

        Obama may have continued the money train, but it was W that allowed it. He COULD have stopped this. he CHOSE to enable it.

        • 0 avatar
          thelaine

          Agreed morbo. There was broad consensus in Washington that the government was going to guarantee GMs BK so that GM would not be broken up, which people believed might destroy the auto manufacturing supply chain for all of the domestics. Some people will not acknowledge this history.

          Other people will not acknowledge that the specifics of the bailout deal were put in place by the current administration. They are the ones who gave away the farm to the UAW as payback for political support. This was pure corruption and totally unnecessary to saving GM.

  • avatar
    HerrKaLeun

    Aafter getting rid of all debt, but without really losign any assetts (thanks to the taxpayer) they are in a better position than many succesful companies that actually have to pay down their old debt.

    If I declare private bankruptcy, no same person woudl lend me any money for 7 years or longer unless i pay premium interest. It seems corporations have short term memory only.

    Whoever lends them money now has no one to blame but himself whne they go bankrupt again and all the money is lost.

  • avatar

    So long as there is a US GOVERNMENT, GM will never be allowed to fail completely. I knew that back when the bailout was on the table for the BIG 3 and I got lucky buying FORD shares well below $1.60 a piece. Got into TESLA when it was less than $28 a little over a year ago. After testing the Model S, I knew it was special.

    But what’s with these confusing credit ratings?

    Why not just make it something everyone understands like A, B, C, D, or F???

    this is worse than the new grading system for middle school: 1, 2, 3 ,4. That’s just STUPID.


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