GM gets boost in credit rating
DETROIT – General Motors received a credit rating upgrade from one of the three major ratings agencies Friday in a vote of confidence that the company has improved its financial standing and can weather challenges in Europe.
Fitch Ratings upgraded GM’s issuer default rating from BB to BB+ and said the outlook for the future is stable.
“Since exiting bankruptcy in 2009, GM has adhered to a strategy of maintaining a low level of automotive debt on its balance sheet, while also maintaining a high level of cash and credit facility availability,” Fitch said in a statement. “This has provided the company with substantial financial flexibility that would allow it to withstand a future auto industry downturn.”
The upgrade comes as GM is generating big profits in North America but facing steep losses in Europe, where consumers are conserving cash in the midst of a sovereign debt crisis.
Fitch said GM has sufficient liquidity and profits to justify the upgrade, which can lower borrowing costs.
The agency pointed to GM’s $33 billion of automotive cash, cash equivalents and marketable securities at the end of the second quarter as a sign of stability.
“It’s one more clear sign that we’re moving the business in the right direction for long-term profitable growth,” GM spokesman Jim Cain said.