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Moody's Cuts Ford, GM Debt to 'Junk'





We all know price cannot be the rescue for carmakers.

From Wall Street Journal:

Moody's Investors Service slashed the ratings of the two largest U.S. auto makers, sending both General Motors Corp. and Ford Motor Co. to speculative, or "junk," grade and indicating that despite recent incentive-driven strides in sales, the old-line manufacturers face significant hurdles to a financial recovery.

Both auto makers issue the vast majority of their corporate debt through their financing arms, and Moody's is the only major rating agency to maintain higher ratings for those lucrative operations. Wednesday's downgrades left Ford Motor Credit hanging on to investment grade, while General Motors Acceptance Corp. was relegated to junk status.

Ford Motor has $147 billion in debt outstanding, while total debt outstanding at GM stands at $270 billion.

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