Fitch downgrades General Motors rating to one notch above junk

Fitch Ratings downgraded General Motors Co.'s long-term issuer default rating to BBB-minus from BBB, putting it one notch above junk status. The rating agency also downgraded GM Financial's IDR to BBB-minus, and said both ratings outlooks are stable. The move is based on the expectation that the auto giant's credit profile will remain weak for a prolonged period, against the macroeconomic environment caused by the coronavirus pandemic. "Fitch expects the macro environment to remain weak through the rest of 2020 and much of 2021, which will likely keep sales volumes well below the 2019 level into much of 2022," the agency said in a statement. "The company's more concentrated operations, with its automotive FCF completely dependent on the North American and Chinese auto markets, could also pose some risk in the future, although it has resulted in less cash burn in the current environment." GM's ratings and stable outlook reflect the company's strong liquidity position and the expectation that it will retain and investment-grade rating once the peak of the pandemic has passed. GM shares were up 1.8% premarket, but have fallen 40% in the year to date, while the S&P 500 has fallen 12%.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.