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Ford, GM bond ratings cut to junk by Wall Street. Only China returns profts on [Copy link] 中文

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Post time 2005-5-6 03:40:47 |Display all floors
Only China can deliver the growth needed by pension funds and large investors.

Standard & Poor's Cuts Ford and G.M. Debt Rating to Junk Status

Published: May 5, 2005

DETROIT (AP) -- Standard & Poor's Ratings Services cut its corporate credit ratings to junk status for both General Motors Corp. and Ford Motor Co., a significant blow that will increase borrowing costs and limit fund-raising options for the nation's two biggest automakers.


The decision by one of the nation's most respected ratings agencies comes as the two iconic American automakers are losing market share at home to Asian automakers, seeing sales soften for their most profitable models and are facing enormous health care and post-retirement liabilities.

The credit ratings agency said its downgrade of GM's long-term rating below investment-grade status reflects its conclusion that management's current strategies may not be effective in dealing with the automaker's competitive disadvantages.


The rating reductions are significant because some big bondholders such as some pension funds are prohibited from buying bonds that are considered by the major rating houses as speculative, or junk. Both GM and Ford had held credit ratings from S& that were at the lowest level of the agency's investment grade spectrum. As a result of the new ratings, the automakers may have to pay higher rates of interest to attract enough buyers for their bonds.

S& Statement:
We believe profitability could remain poor for the rest of this year, and prospects for a return to adequate profitability in the next few years are becoming increasingly uncertain. Although GM has substantial cash reserves, its ability to withstand persistent poor financial performance is not unlimited. We now expect consolidated parent-level cash outflow to be in excess of $5 billion this year. Unless the automotive operations' cash generating ability improves, GM's burdensome postretirement benefit obligations could become even more onerous.


Teleconference details Please note that Standard & Poor's offers all of its broadcast teleconference calls to all interested participants on a complimentary basis.

Live dial-in numbers: (1) 712-257-2017 (1) 519-319-9297 U.K.: (44) 20-7943-5370 Conference ID .: 1868925 Passcode: SANDP1 Replay number: (1) 203-369-0708 Replay will expire on Thursday, May 12, 2005 Live audio streaming: URL: Under Events, select Join An Event Conference ID .: 1868925 Passcode: SANDP1 Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at All ratings affected by this rating action can be found on Standard & Poor's public Web site at; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.

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Post time 2005-5-6 11:22:18 |Display all floors

The two pillars of US economy: automobile and housing industries

In the automobile industry, GM and Ford are the two front ranking companies. If their stocks are "junk", this "pillar" is shaky.

The US housing industry is buoyed by low interest rates, thanks to China buying US$100 billion of US treasury bonds each year to help keep interest rate low and substain a steady stream of house buyers.  This housing "pillar" is dependent on China and other major nations continuing to buy treasury bonds. Call it a dependent pillar.

So, the two pillars are: a shaky pillar and a dependent pillar.

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Post time 2005-5-6 11:27:40 |Display all floors

Reply: The two pillars of US economy: automobile and housing industries


Good point.  The whole edifice is about to collapse.  

This is a good thing.

The sooner the better.

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Post time 2005-5-6 17:28:12 |Display all floors

Myfriend, the real pillars of the American economy is....

(1) The American Empire, comprises of American mainland, the protectorates Germany, South Korea, Japan, Singapore, Israel, and the intimidated nations of Semite Arabs, Taiwan.

(2) The largest FOREX RESERVES currency in the world, worth US$4 trillion at minimum.

(3) Ability to manipulate Commodities, bourse values.

(4) Media, Public relationships to influence the actions of its citizen and foreigners in the Empire and protectorates. The largest Military in the world, 50% of the worlds military budget, 50% of its naval tonnage.

(5) Automobile.

(6) Housing market.

The no.5 pillar  is miniscule compared to the other valueable control. The oil companies, banks, insurance, are more important for its profitability.


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Post time 2005-5-6 17:55:00 |Display all floors

It appears that the Pension fund liability of the auto giants is the main proble

Same problem as the Rover incident in Britain.

It is the burden of the pension payments of retiree to the auto giants. It appears that there is 2 pensioner to every 1 employee in both Ford and GM.

State run pension is under burden because of its financing structure dependent on less working individuals and people retiring with huge sums early.

In China, as we move toward some form of state saving scheme, Provident funds, we have to ensure that we have a vibrant investments of a triad, Treasury/corporate/bank commerical loan bonds, Property Reit (on commercial property) and the Bourse (with dividend paying companies) to equal at least 20% of that the Provident funds (ie. new type of pension fund) will have the liquidity to pay pensioners and for pensioner to reinvest the liquidity into the investment funds or bank savings directed investments.

We should avoid a plunging birthrate and uneven distribution of population. That was what i encourage in STIC, with large REIT, up to 10% of GNP can accrue to a citystate, while 5% comes from income in companies in the bourse especially the citystate's utilities, banks, state run monopolies while the last 5% comes from banking, corporate, government securitized loans turn yielding bond. Something like that in a S$180 billion economy in Singapore would yield a asset securities worth S$720 billion (if 25% to 50% of that going to their CPF funds)- making their CPF provident fund viable even with slight declines in population....i just help solve Singapore problems lar~! if you guys still cannot understand the game in stic, ha ha ha ha ha.


Game master.

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Post time 2005-5-7 03:45:34 |Display all floors


Provide URLs of  American forums in which you also post your majestic dislike of Jews and blacks.

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Post time 2005-7-10 11:01:46 |Display all floors

Ford, GM bond ratings cut to junk by Wall Street.

They will have a whole list of problems, which will bankrupt the state, unless they make a u-turn, to save their own economy, this is the greatest deterent, against world domination, against human right abuses, all their allies will turn, away their faces, cause nobody wants to be dragged, into utter ruins, the collapse of the economy, and how great is the ruins, the drive to be first will end up being the last of all.

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