AP
2005-08-25
SourceNEW YORK -- Moody's Investors Service yesterday became the latest credit rating agency to slash debt of both General Motors Corp. and Ford Motor Co. to "junk" status, a move that will further increase borrowing costs for automakers.
The New York-based rating agency cut General Motor's debt to below investment grade, or junk status, because of its continued operating losses in North America and challenges to restructuring efforts. Moody's was the last of the big three rating agencies to move GM's debt to high-yield status.
The company has about $170 billion US of outstanding debt, according to Moody's.
In addition, Moody's lowered General Motors Acceptance Corp. -- the auto giant's financing arm -- to junk status. The agency also cut GM's senior unsecured debt rating and GMAC's senior unsecured rating.
Meanwhile, the rating agency lowered ratings on Ford Motor's senior unsecured debt and its senior unsecured debt. Ford has about $150 billion US of outstanding debt, according to Moody's.
Both companies' bonds have traded lower since Standard & Poor's lowered their debt to junk status in May.
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