Financial Times FT.com

Carmakers’ finance arms are exposed

By James Mackintosh

Published: May 5 2005 21:32 | Last updated: May 5 2005 21:32

The finance arms of General Motors and Ford are both the most profitable divisions of the two carmakers and the most exposed to the extra unsecured borrowing costs Thursday's downgrade to junk bond status brings.

Eric Feldstein, chief executive of GM Acceptance Corp, warned earlier this year that a downgrade - which happened on Thursday - would cause "a lot of turmoil" in the company's bonds. He said it could prompt spreads over government debt to more than double to 600 basis points for a while.

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