Foresight softens auto ratings blow

Fund manager's comment

Amid their ongoing struggle with global competition and rising health care costs, General Motors and...

Amid their ongoing struggle with global competition and rising health care costs, General Motors and Ford Motor's long-term debt was downgraded to sub-investment grade in early May. Although the decision was widely expected, many thought it would be made later in the year. Although the market had partly priced in downgrade risk, the immediate reaction was that the decision could result in turbulence across the wider corporate bond market. Expectations were that those funds ineligible to hold junk bonds would become forced sellers, driving down prices of similar investments. GM and Ford...