Gm, Ford Bond Ratings Cut to Junk Status

GM, crossbreeding Bond Ratings Cut to Junk Status The two biggest U.S. automakers had their flummox ratings slashed to junk status yesterday by standard & Poors, as the rating service released a erosive report on the business outlook for General Motors Corp. and Ford Motor Co. The slip might develop been expected by and by weeks of financial trauma at GM and Ford, and yesterdays announcement caught Wall Street collide with guard and shelld twain companies stocks to drag down the whole market. A spokeswoman for Kirk Kerkorian said the billionaires head to invest $868 million in General Motors Corp. still stands. (Reed Saxon -- AP) Its a big psychological impact on the truss market and on investor psychology, said David B. Healy, an auto industry psychoanalyst at Burnham Securities Inc. The news humbled two proud symbols of U.S. industry, some(prenominal) of which have lost market sh atomic number 18 to Asian competitors and be struggling with health care and production costs. The biggest single cause of the companies financial problems, S&P said in its report, is the decently sport-utility vehicle. Both Ford and GM make much of their profits on SUVs and relied on the nations appetite for them to hold off overseas competition during the 1990s.

But high gasoline prices and consumer whims are turning the market against large SUVs, and GM and Ford have been caught flat-footed, with severe ramifications, S&P said in its report. The offload to junk status will increase the cost of adoption and limit the companies access to certain credit, but experts said that GM and Ford have enough cash on debate in their automotive businesses to shield them from that problem for some time. Their finance arms stand to be more immediately impact because they are constantly seeking money to support loans, but both have been working to diversify their sources of funding and should be secure for now, S&P said in its report. In fact, both companies argued yesterday that those factors showed that S&P was wrong to grade their... If you want to get a full essay, order it on our website: Orderessay

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