Moody's upgrades GM debt

By Marc Castro

Sep 23, 2013 01:46 PM EDT

General Motors' debt to investment grade status had been restored by Moody's Investment Service to investment grade. This comes eight years after the company's rating was downgraded as it fell towards bankruptcy.

The return to investment grade status was done last Monday morning. This comes shortly after GM had announced its plans to repurchase high interest preferred stocks from a union retiree health care trust fund for a price tag of USD3.2 billion.

The Moody's Investors Service raised the corporate debt rating of GM from Ba1 or junk status to Baa3, its lowest investment grade rating. Other ratings agencies have retained the GM debt as junk status. The upgrade done by Moody's would mean it would receive lower interest rates when it tries to loan funds in the future.

The credit ratings of General Motors had been retained in junk status since 2005. This wa the time the company was deeply mired in debt, with the company losing market share and overproduction from its factories. By filing 2009 bankruptcy, GM had closed a number of its plants and erased its debt. Since 2010, it had made an annual profit each year after climbing out of bankruptcy protection.

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