General Motors Co., Detroit, was given the same credit rating by Moody’s Investors Service —Ba2 — as Ford Motor Co.
Moody’s on Monday gave GM the rating, the second level below investment grade, with a stable outlook. The firm rates an anticipated GM secured credit facility as Baa3, the lowest investment-grade level. GM hasn’t publicly disclosed the facility’s terms.
However, GM needs to trim its $26 billion unfunded pension liability to “contend with the industry’s ongoing cyclicality,” J. Bruce Clark, a Moody’s senior vice president, wrote in the ratings statement.
GM’s U.S. defined benefit plans had $84.5 billion in assets and $101.4 billion in liabilities as of Dec. 31, according to the company’s latest 10-K filing. GM’s non-U.S. plans had $14 billion in assets and $24.3 billion in liabilities as of Dec. 31, according to the filing.
“GM has the potential to become a more formidable player in the global automotive arena,” Mr. Clark wrote, citing GM’s position in North America, Asia and Latin America. He said GM would have “one of the more balanced global footprints in the industry” if it fixes the unprofitable European business.
Moody’s raised Dearborn, Mich.-based Ford’s rating by two levels to Ba2 on Oct. 8, saying the automaker’s operating performance “significantly exceeded” expectations. The upgrade to Ford’s corporate family rating was the fifth by Moody’s in 13 months.
Standard & Poor’s gave GM a BB- rating on Oct. 7, one level higher than Ford’s B+, because of its improved balance sheet and prospects for generating cash from operations in markets such as China and Brazil.
Fitch Ratings gave GM a BB- rating on Oct. 6, the same as Ford’s. GM and the U.S. Treasury aim to hold an $8 billion to $10 billion IPO in November, two people familiar with the plans said last month.
Barry B. Burr, Pensions & Investments’ editorial page editor, contributed to this story.