AAA Rating and GM's Junk
Standard & Poor's on Wednesday warned it could cut its debt rating on General Motors Corp. to junk status at any moment after the world's biggest automaker slashed its 2005 earnings forecast. GM is the third-largest corporate borrower in the United States behind General Electric Co. (GE.N: Quote, Profile, Research) and Ford, with more debt than gross domestic product of many countries.
GM's debt was rated "AAA" in 1981 by S&P. S&P now rates the long-term debt of GM and General Motors Acceptance Corp. at "BBB-minus," one step above junk status. A downgrade to junk status would likely significantly raise borrowing costs at GM and its finance arm GMAC, which had about $300 billion in debt at the end of last year.
The eight remaining AAA rated companies:
AIG
Automatic Data Processing
Berkshire Hathaway
ExxonMobil
General Electric
Johnson & Johnson
Pfizer
United Parcel Service
Source: Moody's
The falling number of AAA rated companies is a dramatic sign of how companies' priorities have shifted to place greater value on growth over stability.
GM Posterboys
Reuters: S&P Revises GM's outlook
USA Today: Fewer Companies Rated AAA
GM's debt was rated "AAA" in 1981 by S&P. S&P now rates the long-term debt of GM and General Motors Acceptance Corp. at "BBB-minus," one step above junk status. A downgrade to junk status would likely significantly raise borrowing costs at GM and its finance arm GMAC, which had about $300 billion in debt at the end of last year.
The eight remaining AAA rated companies:
AIG
Automatic Data Processing
Berkshire Hathaway
ExxonMobil
General Electric
Johnson & Johnson
Pfizer
United Parcel Service
Source: Moody's
The falling number of AAA rated companies is a dramatic sign of how companies' priorities have shifted to place greater value on growth over stability.
GM Posterboys
Reuters: S&P Revises GM's outlook
USA Today: Fewer Companies Rated AAA
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