DETROIT -- General Motors said on Tuesday that its finance arm "feels the pain" of cuts in the company's debt ratings to "junk" status.
"The automotive sector drives the level of ratings, GMAC, the financial services business, feels the pain of the these ratings," GM spokeswoman Toni Simonetti told Reuters.
She was referring to the run-up in borrowing costs at GM and General Motors Acceptance Corp. since Standard & Poor's cut GM's debt to non-investment grade on May 5. Fitch Ratings also cut GM to "junk" on Tuesday.
"We're clearly disappointed in the speed with which these rating agencies have moved us to a non-investment grade," Simonetti said.
"We clearly understand the issues and the challenges in the automotive sector, the North American automotive sector, and we're working aggressively to address those," she added.
Simonetti did not elaborate, but Fitch cited a protracted decline in sales of GM's gas-thirsty sport-utility vehicles and mounting competition in the truck market as driving forces behind its downgrade.
The world's largest automaker, which has been struggling to turn its U.S. automotive operations to profit, relies heavily on GMAC, its finance and lending arm, for financial support. But rising borrowing costs limit its future options for raising funds.
The combined S&P and Fitch downgrades could also force investment funds ineligible to hold junk bonds to sell billions of dollars of GM debt.
David Healy, an automotive analyst at Burnham Securities called Fitch's downgrade a "nonevent," however.
The bulk of the damage to GM and its investors was already done by S&P three weeks ago and many GM bondholders have already "bailed out," Healy said.
"My guess is it won't have much market effect," Healy said. "This thing has been telegraphed pretty well."