Monday, July 17, 2006

Alliance talk boosts GM's bonds

Tuesday, July 11, 2006
Alliance talk boosts GM's bonds
Mark Pittman And Caroline Salas / Bloomberg News

The bond market has voted "yes" to the proposed alliance between General Motors Corp., Renault SA and Nissan Motor Co.

GM's 8.375 percent debentures due in 2033 have returned 4.19 percent since June 29, the day before Kirk Kerkorian successfully lobbied the board to authorize CEO Rick Wagoner to study working with Tokyo-based Nissan and Boulogne-Billancourt, France-based Renault to help save on development and production costs. GM lost $10.6 billion in 2005.

"GM seems to be more on the offensive," said Jim Cusser, who manages about $1.5 billion in fixed-income securities at Waddell & Reed Inc. in Overland Park, Kansas. Cusser's fund owns $7 million of 5.125 percent notes due in 2008 issued by the Detroit-based automaker's finance unit.

Bonds of GM are outperforming other auto company debt, which returned 1.76 percent since June 29, according to an index compiled by Merrill Lynch & Co.

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