A strike by United Auto Workers against General Motors may force credit appraisers to take action and bring the company closer to the state of garbage, according to Bloomberg Intelligence.
The strike has now exceeded the two-week threshold in its fourth week, which valuers, including Moody & # 39; s Investors Service and S&P Global Ratings, said pose a risk, Bloomberg Intelligence analyst Joel Levington wrote in the report.
So far, General Motors' bonds have barely moved, with their shares plummeting 13 percent since the strike went into effect on September 16.
Credit default swaps have since expanded, but the same is true of peers Ford Motor and Fiat Chrysler as well as the widest investment grade market.
S&P and Fitch Ratings GM rate "BBB" two levels above the junk. Moody & # 39; s, S&P, and Fitch have a stable chance of qualifying as a carmaker.
The Detroit-based carmaker and the union remain stalled due to labor guarantees.
"The longer this goes on, the greater the risk that GM will need to get bigger concessions," said Olesya Zhovtanetska, senior director of public fixed income at Sun Sun Investment Management. "It goes beyond the immediate financial effects."
General Motors may have problems financing its liabilities if the strike is not resolved before evaluators lower their forecasts or ratings, Levington said.
The company has more than $ 100 billion in debt, most of which is related to the financial part.
That's largely responsible for the $ 2.7 billion debt that GM expired in the first quarter of next year.
Steelworkers are suffering
Analysts at UBS Group AG are wary of national steelmakers, arguing that the market is likely to weaken as manufacturers oriented worse than expected. Worsening the concern is a strike by GM, as the manufacturer accounts for nearly 5 percent of annual steel consumption in the United States.
Domestic hot-rolled coils, the reference price for steel, have fallen almost 39 percent in the last 12 months. Meanwhile, US Steel sank 63 percent last year, AK Steel Holding fell 54 percent, while Steel Dynamics lost 37 percent, while U.S. industry leader Nucor showed a 23 percent decrease. how much.