GM's stock suffers second rating drop; bankruptcy questions linger

| 2/23/2006

The financial outlook for domestic auto manufacturer General Motors Corp. has gone from bad to worse.

On Tuesday, Feb. 21, Moody’s Investors Service, one of the two major stock-evaluating agencies, dropped GM’s $30 billion in debt to B2 status. That’s five steps below investment grade, and six above the worst possible rating.

GM has seen its share of bad news in the markets during the past few months. In December 2005, Standard & Poor’s Ratings Services gave the company a B rating with a negative outlook.

The ratings have raised new questions about whether the former manufacturing juggernaut would have to file for bankruptcy protection, or sell off more of its assets to stay afloat. However, officials with GM said that future is not in the cards.

“I’d just like to set the record straight here and now: There is absolutely no plan, strategy or intention for GM to file for bankruptcy,” GM CEO Rick Wagoner said in a letter to company employees.