Standard & Poor’s lowered GM’s rating to triple-B from triple-B-plus, putting the car maker just two levels over junk status. In making the announcement, S&P said GM’s pension obligations world-wide may be underfunded by as much as $28 billion – and put Ford’s debt rating on watch for a downgrade to the same level, also citing rising pension-fund deficits and other factors.
In a sparate development, American Airlines parent AMR said that if actual investment returns continue at current levels and interest rates remain unchanged through the rest of the year, it will be required to record a significant minimum pension liability in 2002, according to an SEC filing. The firm said the charge to shareholders’ equity likely will exceed $1 billion before tax, according to Dow Jones, but noted that the charge won’t affect AMR’s financial covenants in any of its credit agreements.