Moody's downgrades F to Ba1 and FMC to Baa3
(UBS) As expected, Moody's downgraded F to Ba1 from Baa3 and downgraded FMC
to Baa3 from Baa2. Moody's assigned negative outlooks for both companies.
Downgrades reflect deteriorating operating performance:
The downgrades reflect F's deteriorating operating performance, falling
market share, and uncompetitive cost structure.
We maintain Market Perform on F; we prefer FMC bonds:
We maintain a Market Perform opinion on F, rate F "BB+", and prefer FMC to F bonds.
Risk Tolerance is Key:
Investors should consider whether F/FMC bonds are appropriate investments
General Motors: Moody's Downgrades GM to Ba2 and GMAC to Ba1
Moody's downgraded GM to Ba2 from Baa3 and GMAC to Ba1 from Baa2.
Moody's assigned negative outlooks for both companies.
Downgrades reflect operating losses at GM's auto unit:
The downgrades reflect operating losses at GM's auto unit, high fixed
costs, excess capacity, and the weakness of GM's U.S. supply base.
We maintain Underperform on GM; we prefer GMAC to GM bonds:
We maintain an Underperform opinion on GM, rate GM "BB", and prefer
GMAC to GM bonds due to potentially higher recovery value at GMAC.
Risk Tolerance is Key:
Investors should consider whether GM/GMAC bonds are appropriate
investments given their risk tolerance profile.
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