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View Full Version : GM and Ford downgraded to junk


Fester
07-05-05, 11:03 PM
Nuts :o

BBC News Article (http://news.bbc.co.uk/1/hi/business/4518931.stm)
Jack
08-05-05, 07:09 PM
Laymens terms...??
ANDYRACER
08-05-05, 07:19 PM
Laymens terms...??

Thats what i was thinking.
Alex
08-05-05, 07:48 PM
The news often mentions when a large company is upgraded or downgraded by a debt rating service. The reason these stories are making news is that the company's financial health is being examined.

The BBC news website is quoting the Standard & Poors rating, but in general all of the usual standards are similar (e.g. S&P, Moody's, FITCH IBCA etc). The ratings vary from between AAA to around C/D. Obviously AAA is the best. The term "Junk" status means that it has fallen below the Baa bracket, and as stated on the website the highest "junk" grade as BB+.

It is used for a number of reasons such as investment and financial risk assessment of the company in question. Moving from investment grade to junk is not good. However for a comapny so large as Ford or GM is is not a massive thing, it means sales are down, not that the comapny is going under.
Nick
08-05-05, 07:54 PM
so a storm in a teacup then ?

so this means that people will now be unwilling to invest in shares e.t.c for the company ? surely that'l cause some problems.
Stuart
09-05-05, 08:38 AM
with luck it will drive the share price down so people will invest ;)

Ford are in debt etc but the company is still fairly strong. the US market took a massive hit alst year for some reason, but the rest of the world is doing fine if not better than ever. Where i work is so closely woven with Ford that we find out all the good/bad news early ;)
Alex
09-05-05, 08:01 PM
Most of the big western automotive companies had a big decline in sales due to another small boom of eastern (jap) maufacturers. However we supply parts and systems for many car manufacturers including ford, opel, VW and volvo and their orders if anything have increased. Which is bizzare lol. To be honest I think they are just cutting their profits to make up for the decline to try and win customers back however they must be very careful not to produce loss leaders as it doesn't work in this sort of market.