Moody’s Cuts G.M.’s Credit Rating Again February 23, 2006
Moody’s Investors Service cut the debt rating of General Motors further into noninvestment grade territory on Tuesday, citing uncertainty about its ability to establish competitive wages and benefits without filing for bankruptcy protection. Moody’s lowered G.M.’s $30 billion in debt one level, to B2 from B1, five rungs below investment grade. It also assigned the company a negative outlook, actions that will make it more expensive for the company to borrow money. Moody’s placed G.M. under review for a possible downgrade on Jan. 26. A G.M. spokeswoman, Gina Proia, said the company had already taken some major steps to return to profitability. They include a plan to cut 30,000 jobs and close 12 plants by 2008. G.M. lost $8.6 billion last year, largely because of a reduction in market share and high costs in North America, where it lost $5.6 billion, she said. “We do have a well-thought-out strategy for improving North American operations, and we’re rapidly implementing that strategy,” Ms. Proia said.
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