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Fitch steers GM rating lower
Bill Condie, Evening Standard23.09.08
Carmaking giant General Motors has been downgraded deeper into junk territory on fears its liquidity could become a critical problem.
Fitch Ratings dropped GM's credit rating one notch to triple-C from B minus.
Fitch analyst Mark Oline said the firm's liquidity could drop to "minimum required levels" within the next year because of tightening credit in the US, weakening overseas results and continued sales declines in North America.
The company also needs a large amount of capital spending to transform its line-up from trucks and sport utility vehicles to smaller, more fuel-efficient models.
"If industry sales stay flat in 2009 with a deeply depressed 2008, we do think the revenue pressures that GM and the industry will face will likely be in excess of their ability to reduce costs," Oline said.
"So we do project that liquidity will continue to decrease, and the company's access to capital is severely limited by the conditions of the industry and the capital markets."
