Fitch Ratings Services has raised its Long-term Issuer Default
Ratings (IDRs) and Preferred stock rating on
General Motors Company
) to 'BB+' from 'BB' and to 'BB-' from 'B+,' respectively.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
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The rating agency has also affirmed its Long-term IDR and Senior
unsecured debt ratings on General Motors Financial Company, Inc.
(GMF) at 'BB.' Long-term IDR rating on General Motors Holdings LLC
(GM Holdings) is upgraded to 'BB+' from 'BB' and Secured revolving
credit facility rating is reaffirmed at 'BBB-.' Moreover, Fitch has
conferred a stable outlook on all three entities.
The rating upgrades reflect the company's ability to generate free
cash flow, maintain a strong liquidity position along with low
leverage, decline in pension obligations and improved product
portfolio. The company's strategy of maintaining a low level of
automotive debt and a high level of cash and credit facility
provides a financial flexibility which can resist the fluctuation
in the auto industry.
However, the stable outlook depicts that the agency will not be
upgrading the stock in the near future. Meanwhile, the rating could
be further improved if the company's margins from North America
rise along with stabilization of financial performance from its
General Motors had cash and cash equivalents of $22.18 billion as
of June 30, 2012, compared with $20.47 billion as of June 30, 2011.
However, total debt (Automotive and Financial) increased to $14.79
billion as of June 30, 2012, from $4.71 billion as of June 30,
During the first half of the year, the company had net cash flow
from operating activities of $6.03 billion, up from $4.37 million
in the year-ago period. After deducting $4.05 billion and $2.49
billion of capital expenditures in the first half of 2012 and 2011,
respectively, the company's free cash flow stood at $1.98 billion
for the six month period ended on June 30, 2012, compared with
$1.87 billion for the six month period ended on June 30, 2011.
Detroit, Michigan-based General Motors has a business presence in
almost 120 countries and facilities located in 31 countries.
However, like its competitor
Ford Motor Co.
), the company's significant exposure to troubled Europe has
adversely affected its operations.
Currently, General Motors retains a Zacks #3 Rank, which translates
into a short-term Hold rating.