Battle for US car manufacturer debt
by Brian Turner
It is beginning to look as if there may be a fight over who gets to trade the debt of General Motors and Ford after the two carmakers’ were downgraded to junk status last week.
There are generally separate trading desks to take care of high grade and high-yield debt.
While the two desks usually work together more closely today than they did in the past, the amount of money to be made trading GM’s and Ford’s paper is expected to lead to a battle over just who gets to handle the transactions.
One analyst said that despite the high-yield status of the two companies since their downgrade, the amount of money in question may mean that the high-grade desks will be reluctant to relinquish their handling of the product.
It could also be that because GM and Ford are so big and generate so much money for Wall Street, the two companies could attempt to use their influence to get banks to change how they classify existing debt.
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