GM official says there is no issue about ability

April 20 | Updated: Apr 21 2005, 05:37am hrs
General Motors Corporation chief financial officer John Devine said there is no issue over the worlds largest automakers ability to repay $300 billion in debt. GM has been stockpiling cash as its credit rating was cut to the brink of junk. Since 1999, the Detroit-based companys cash is up 57% to $22.6 billion by the end of last year.

It has $15.4 billion of bonds due this year. There is no issue about our ability to service our debt, Mr Devine said in an interview on Tuesday. Weve also gone to a number of other financing sources during the past couple of years. Weve relied less on the debt market.

Bond prices show investors are not as optimistic. The cost to insure $10 million of GM debt against default rose to a record of about $698,000, according to broker GFI Group in New York. GM bonds trade at yields that suggest investors place an 11.7% probability of default over the next year, according to Timothy Patrick, global head of investment-grade debt research at Banc of America Securities.

They have to stabilise market share and get health-care costs under control, said Mirko Mikelic, who oversees bonds at Fifth Third Asset Management in Grand Rapids, Michigan, including GM and Ford debt.