GM's finance arm, General Motors Acceptance Corp., appears to be inching closer to selling its first bonds in two years. Not since 2004 has GM been in a strong enough financial position to make such an offer. GMAC's sale to a group of buyout firms may be completed by the end of the year, which would allow such a sale to proceed. The significance of such a bond issue is that it would signal increasing investor confidence in GMAC, which slipped to non- investment grade in May 2005.
As Chief Executive Officer Rick Wagoner continues to slash costs, GM's junk bonds are starting to recover. Talks of an alliance with Renault SA and Nissan Motor Co. as well as the $14 billion raised through the sale of GMAC, are helping to bring GM back from it's largest losses since 1992. Some analysts are predicting GM may be back to investment grade by the end of the year.
[Source: Bloomberg]
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