GM COO Fritz Henderson has warned of continuing fallout in credit markets following yesterday’s bankruptcy filing of investment bank Lehman Brothers and ongoing pressures on the financial sector. His remarks draw attention to the liquidity problems that may intensify for some companies as credit markets tighten further.
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Henderson, who was speaking to the Reuters Autos Summit in Detroit, said that the credit markets have been effectively closed to corporate borrowers except those with the highest credit ratings.
“I would say things have been difficult already,” Henderson told Reuters. “Capital markets have been quite difficult, and this is just going to make it more so.”
He added: “We’re in for some rough waters here at least for this week if not the next couple of months.”
“In terms of raising capital, you’ve got pretty much closed debt markets for anything other than triple-A-rated companies. You don’t have that avenue available to you,” Henderson said.
“If you look at any company that’s got business challenges, the markets are very difficult to deal with.”
Henderson also said the difficulty accessing capital markets made it more urgent for the US Congress to approve funding that would clear the way for $25 billion in low-cost loans for the auto industry to fund plant retooling and other investment in fuel-saving technology.
See also:
US: Automakers eye federal loans
US: GM accountants get axe out again
