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Approaching 100bp !

05 November 2020 by jbchevrel

General Motors Co (GM) does trucks, cars, auto parts and financing worldwide. Their brands include Buick, Cadillac, Chevrolet, GMC and Holden. Today GM 5y CDS was tighter by -20bp, thus outperforming notably the US IG CDS market. GM CDS is approaching 100bp, a level that it rarely deviated much from, on the downside. A (temporary?) recovery in the global car market drove GM Q3 profits higher +74% (vs Q319) to $4B. Sales in the US and China are recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially full-size pickups and SUVs. Revenue stayed flat $36B. H220 EBITDA was forecast $4-5B back in July, it is now forecast $8.5-9B. EBIT in North America was $4.37B vs $2.95B consensus and $3.0B in Q319. EBIT was positive for GMI ($10M) and GMF ($1.21B). Auto liquidity of $37.8B was recorded and auto operating cash flow was $9.1B. The flip side of these good news for credit, if any, is that GM plans to pay again a dividend from mid21 and they they remain in discussions with Nikola (now famous hydrogen truck maker) on the purchase by GM of an 11% stake. The deadline for a deal is December 3.