LONDON -- Fitch Ratings said on Thursday it had downgraded the senior unsecured ratings of General Motors and financial services subsidiary General Motors Acceptance Corp. to BBB+ from A-.
The agency said in a statement it affirmed the companies' commercial paper ratings at F2. The rating outlook remains negative, Fitch said.
Fitch said the downgrade was due to the more negative incentives environment, weaker than expected performance in the U.S. light vehicles sector, continued worries about healthcare and pension costs, and longer-term concerns about GM's competitive position.
Euro-denominated bonds of GMAC didn't react to the news, said a dealer in London.
"This is very much bringing the rating into line with that of rivals Standard & Poor's and Moody's Investors Service," he said. The firm's 6.125 percent bond due 2007 was quoted yielding around 240 basis points over government debt.
Money managers are usually required to take investment decisions on the lowest rating available for a company, he said, and so a downgrade to this level had long been reflected in bond prices.
Standard & Poor's was the first of the big three agencies to take GM and GMAC into the triple-B category. On October 16 last year, it cut both GM and GMAC to BBB, the current rating, one notch below that of Fitch. S&P has a negative outlook on the ratings.
Moody's on June 13 of this year cut GM to Baa1 from A3, and GMAC to A3 from A2, keeping a negative outlook for all of the ratings.