S&P Doesn't Give GM Much Credit
Standard and Poor's believes in giving credit where credit's due. General Motors doesn't qualify. According to the Detroit News, S&P has removed GM from its list of companies in line for a credit rating upgrade. The agency has decided that loaning money to the ailing automaker remains a risky venture, even with a new labor contract that GM says will save them billions of dollars. S&P still sees "serious challenges ahead" for the beleaguered company. ""We had to look at the economy and non-contract issues," demurred Analyst Bob Schultz. "Still, the most important factor is if they're using or generating cash. We still expect GM to be using cash in their North American operations." Schultz predicts weak U.S. auto sales will keep GM burning through its reserves, as it continues spending on restructuring without a significant increase in revenues. Even if GM's products suddenly find favor in the American markeplace, it's unlikely that S&P will upgrade GM for another six months to two years.
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