Following on the heels of disappointing February sales numbers, Fitch Ratings lowered GM credit ratings deeper into junk territory, blaming
lack of progress in lowering operating costs. Fitch now rates GM bonds at “B” – five levels below investment
grade.
Fitch thinks it increasingly difficult to forsee GM doing anything with its United Auto Workers
contract before it officially comes up for renegotiation in September 2007, which makes it unlikely that significant
progress can be made on the cost reduction front in the meantime.
Meanwhile, the sale of a controlling
interest in the company’s GMAC financial unit seems to
be going nowhere, according to investment bank Goldman Sachs. The sale would raise cash for GM and reduce borrowing
costs at GMAC, but the automaker commented at the Geneva Motor Show that it is in no hurry to sell its money men,
possibly because a suitable buyer has not emerged.