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GM debt rating drops further

Tue., Dec. 13, 2005

New York Standard & Poor’s cut its ratings on General Motors Corp. deeper into junk status on Monday, citing increased skepticism about the troubled automaker’s ability to revitalize North American operations.

The rating agency cut GM’s corporate credit rating by two notches to “B” from “BB-minus.” S&P removed the company from CreditWatch, but maintained a negative outlook.

General Motors’ debt is rated non-investment grade, or junk, by all three major credit rating agencies. The company has been contending with soaring employee and commodity costs, as well as a decline in sales because of higher gasoline prices.

Moody’s Investors Service and Fitch Ratings rate GM’s debt at “B1” and “B-plus.” Companies whose debt is rated at high-yield status often face higher borrowing costs.

Ratings for General Motors Acceptance Corp. were not changed but remain on review with “developing” implications. GM said in October that it is considering selling a controlling stake in the profitable finance arm.

GM shares rose 13 cents to close at $23.05 Monday on the New York Stock Exchange.

UAW to review health care deal with Ford

Detroit United Auto Workers leaders will meet Wednesday to review a tentative agreement on health care costs with Ford Motor Co., the union said.

UAW spokesman Paul Krell did not say where or when the UAW-Ford Council would meet, nor did he comment on the agreement Monday. The union has said, however, that the deal announced Saturday will require “sacrifices” from workers and retirees.

The agreement is subject to ratification by active members and to court approval.

Ford spokeswoman Marcey Evans has said the nation’s No. 2 automaker won’t comment on the negotiations.

Last month, General Motors Corp. got some relief from its spiraling health care costs as UAW members agreed to pay more of their health costs. The world’s biggest automaker had asked the UAW for the concessions this spring as health care costs rose and it lost U.S. market share to Asian competitors.

Nasdaq 100 realigned; Google added

New York High-flying Internet company Google Inc. and 11 other companies were added Monday to the Nasdaq 100, the Nasdaq Stock Market’s index of the 100 largest non-financial companies listed on the market.

The Nasdaq 100 is a widely used benchmark for a variety of mutual funds and exchange-traded funds. The Nasdaq 100 Index Tracking Stock, better known as the QQQ, is one of the most popular index-linked stocks in the world and is a component of hundreds of mutual funds and pension funds. The trust that runs QQQ has more than $20 billion under management.

Google, which went public in August 2004 and now has a market capitalization of $128.3 billion, was widely expected to join the Nasdaq 100 after seeing its stock price more than quadruple over the past 16 months.

The other 11 companies included in the index Monday were NII Holdings Inc., Expedia Inc., Patterson-UTI Energy Inc., NVIDIA Corp., Urban Outfitters Inc., Cadence Design Systems Inc., Activision Inc., RedHat Inc., Monster Worldwide Inc., CheckFree Corp. and Discovery Holding Co.

To make room for the newcomers, the Nasdaq 100 is removing 12 other companies who have fallen out of the top 100 non-financial companies listed on the Nasdaq. Those companies are Career Education Corp., Dollar Tree Stores Inc., Intersil Corp., Invitrogen Corp, Level 3 Communications Inc., Millennium Pharmaceuticals Inc., Molex Inc., Novellus Systems Inc., QLogic Corp., Sanmina-SCI Corp., Synopsys Inc. and Smurfit-Stone Container Corp.


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