Moody's may downgrade GM debt again

Credit rating agency Moody's is said to be considering another downgrade of General Motors' debt rating, which is already languishing six levels below junk-bond level. The potential move is said to be a reaction to GM's latest move to replace a $5.6B line of credit, which may require GM to pledge some of its assets to secure. Such a move would result in fewer assets available to unsecured creditors in the event of a bankruptcy.

Some speculation exists that another downgrade could scuttle the sale of the GMAC finance arm, but that deal becomes invalid only if GM's rating were to fall three notches from its current level; the proposed downgrade by Moody's would likely only involve a drop of one level.

[Source: Reuters]

Share This Photo X