Fitch Ratings, one of the three major ratings agencies, Friday has boosted General Motors Co.’s issuer default rating from BB to BB+, the highest tier of speculative-grade.
But most important was that Fitch said the outlook for the future is stable, and GM has sufficient liquidity and profits even if the company is losing in Europe.
“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.”
Of the other two major rating agencies, Standard & Poor’s also rates GM BB+ with a stable outlook, and Moody’s rates GM Ba1 – its version of the top junk rating – with a positive outlook.
“It’s one more clear sign that we’re moving the business in the right direction … ” GM spokesman Jim Cain said.
General Motors said its second-quarter profit declined 38 percent amid losses in Europe and South America, but even so – the company marked the 10th consecutive profitable quarter.
Shares were recently trading 17 cents lower at $21.17.