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Last Updated: Tuesday, 13 December 2005, 15:37 GMT
GM bankruptcy not 'far-fetched'
GM sports utility vehicles
GM has launched a restructuring plan to save $2.5bn a year
Investment research firm Standard & Poor's has downgraded its credit rating for General Motors, saying bankruptcy is not a "far-fetched" option.

Car giant GM has lost nearly $4bn (2.2bn) this year as it contends with high staff costs, falling market share and a slump in sales of 4x4 vehicles.

The company recently announced it was closing 12 North American plants and cutting 30,000 jobs.

Its shares are down 40% in 2005, and slipped 2% in early Tuesday trading.

"In the past we might have felt at different points that the concerns about bankruptcy risk were way overplayed," a Standard & Poor's spokesman said in an analyst conference call.

"At this juncture, it's our conclusion that this isn't a far-fetched possibility if the kind of deterioration in results we've seen over the last few quarters should continue."

S&P has already downgraded GM's debt to below what is termed "investment grade" - the level which large companies are expected to retain and which guarantees a relatively low interest rate on borrowing.

On Monday, the ratings agency cut GM by two steps to "B" - five levels below investment grade - with a negative outlook, meaning that it expected it would have to cut it further within the next two years.


SEE ALSO:
Doubts remain over GM's future
22 Nov 05 |  Business
Car giant GM to cut 30,000 staff
21 Nov 05 |  Business
GM shares stumble to 18-year low
17 Nov 05 |  Business
GM workers agree healthcare deal
11 Nov 05 |  Business


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