Tuesday, May 24, 2005
An Interesting Note
Bondholders may have lost as much as $32 billion this year by holding debt sold by Ford Motor Co. and General Motors Corp., according to research from Deutsche Bank AG. On May 5, Standard & Poor's cut the credit rating on the two biggest U.S. automakers to junk.
"GM and Ford have not defaulted, but the amount of market value wiped off their debt so far in 2005 is larger than the biggest corporate default in history," Deutsche's European credit strategists, Gary Jenkins and Jim Reid, wrote in a report published May 17.
The report said the average market value of GM and Ford debt fell 15 percent this year, or $18 billion for GM and $14 billion for Ford.