GM’s upgraded ratings to support financial unit image

According to the automaker’s Chief Financial Officer Chuck Stevens, pills the company intends to reap the benefits of returning to investment grade, purchase which could bring decreased borrowing costs, adding strength to its financial division.

Late last week, Standard & Poor’s Ratings Services have brought GM and General Motors Financial to a higher BBB rating, on the grounds of better European progress, a healthier cash flow and smaller than expected reputation and sales loss following the string of recalls this year.

“This ultimately supports GM Financial and our planned expansion of that business globally, which ultimately helps us sell more cars globally and improves customer loyalty,” Stevens said in an interview. “That’s, first and foremost, the benefit of this upgrade.”

“This is yet another milestone in moving further away from the bankruptcy period,” said Michelle Krebs, an analyst with researcher AutoTrader.com in Royal Oak, Michigan. “They have gotten their financial house in order and this shows that they can now withstand things like the recall.”

GM’s Financial unit was created through the $3.5 billion buy out of subprime lender AmeriCredit Corp. Besides that, the division – seen as a “core” subsidiary by S&P – also acquired Ally Financial’s international operations in South America and Europe in 2012. The unit is now working on doing the same purchase for Ally’s joint-venture company in China, according to Jim Cain, a GM spokesman.

Via Bloomberg