Fitch downgrades GM credit rating to junk status.NEW YORK New York, state, United States
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International credit-rating agency Fitch Ratings Fitch Ratings
An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. cut the credit rating for General Motors Corp. on Tuesday to junk bond junk bond, a bond that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. or non-investment-grade status, in what heralds financial difficulties for the world's largest carmaker.
Fitch lowered the long-term senior unsecured debt ratings on GM and its finance arm General Motors Acceptance Corp. by one level to BB-plus from BBB-minus.
''The action reflects the continuing decline in GM's North American sales of key mid-size and large SUV products, increasing product and price competition in the large pickup market, and the corresponding impact of these two segments on consolidated profitability,'' Fitch said.
Its ratings outlook for GM remains negative.
The downgrade, which prompted prices for GM stocks and bonds to plunge, followed similar ratings action earlier this month by Standard & Poor's.
S&P cut its debt ratings for GM and Ford Motor Co. on May 5 to junk bond status, citing their gloomy business prospects. The U.S. ratings agency also said GM's consolidated debt outstanding totaled
$291.8 billion at the end of March.
With those ratings, GM will likely have to pay more to borrow and see its financial situation further deteriorate.