DETROIT (AP) ― A key ratings agency has restored General Motors’ debt to investment grade status, eight years after the company lost the rating as it spiraled toward bankruptcy protection.
The upgrade came on Monday morning, shortly after GM announced plans to buy back high-interest preferred stock from a union retiree health care trust fund for $3.2 billion.
Moody’s Investors Service raised GM’s corporate debt from Ba1, which is junk status, to “Baa3,” the lowest investment grade rating. Two other ratings agencies, Fitch and Standard & Poors, still have GM at junk status. The upgrade likely means GM will get lower interest rates when it borrows money in the future.
GM’s credit ratings have been in junk territory since 2005, when the company was struggling with huge debts, falling U.S. market share and factories cranking out more cars than people were buying. GM closed plants and erased much of its debt with a 2009 bankruptcy. It has made an annual profit every year since 2010.
In August, Fitch raised GM’s outlook to positive from stable and said it could upgrade GM within two years. Standard and Poor’s also raised GM’s outlook to positive earlier this month.
“Good things happen when you build great cars and trucks and deliver strong financial results,” GM CEO Dan Akerson said in a statement.
GM shares rose 11 cents after the news to $36.94, a little less than a dollar short of the stock’s one-year high. The stock is up 28 percent so far this year.
