Bailout Watch 493: S&P "Chrysler C7, GM C11"

It’s always interesting to see how multiple media outlets interpret stories carried communally. In this case, here’s the beef: Standard & Poor’s ratings agency cut Chrysler’s senior secured first-lien term loan (due 2013) to CC from CCC; and lowered its issue-level ratings on GM’s $4.5B senior secured revolving credit facility to CCC-. (That’s nine grades below investment quality.) Automotive News [sub] waits all the way to the second paragraph before offering Motown apologists a heart to hang on to. “The rating downgrades put extra pressure on the two iconic U.S. carmakers, whose already declining fortunes have worsened during the ongoing global economic downturn.” The Wall Street Journal [almost] gets to the meat of the matter straight off . . .

“The ratings firm warned that large parts of Chrysler likely would be broken up and sold off if it files for bankruptcy protection.” In other words, expect Chapter 7 liquidation on May first. Reuters UK minces no words. “If Chrysler goes into bankruptcy, I would expect it to go into liquidation — that its assets would be sold in whole or in part,” [Standard & Poor’s recovery analyst Greg] Maddock said. “Instead of being reorganized, there would be no carmaker after bankruptcy.”

And then, from another source . . .

The action by the New York credit rating service comes as talks intensify between President Barack Obama’s auto task force and Chrysler’s banks over how much of a discount, or haircut, the banks will accept in negotiations to restructure the troubled Auburn Hills-based automaker.

Chrysler must strike a deal with its creditors, the UAW, dealers and proposed partner Fiat by the end of April or face bankruptcy.

Guess who? The Detroit News. TTAC’s take: Chrysler takes a dirt nap, showing everyone that The Presidential Task Force on Autos (PTFOA) is rough and tough. GM gets a politically sensitive PTFOA-designed C11 and emerges . . . to syphon some mo’.