General Motors CEO Dan Akerson expects the automaker to soon regain its
investment-grade credit rating and rejoin the Standard & Poor's 500 about four
years after being removed from the index.
Akerson planned to say at the Notre Dame Mendoza College of Business commencement ceremony Saturday that the automaker is "on the cusp" of the improved credit rating and will probably rejoin the S&P 500 "before too long," according to a copy of his prepared remarks.
A higher credit rating could lower the cost of borrowing for GM, whose corporate debt is currently rated one step below investment-grade by the major ratings agencies.
Rejoining the S&P 500 would open up the automaker's stock to additional investments by index-based mutual funds, which could boost its stock price.
GM was removed from the S&P as it approached Chapter 11 bankruptcy in 2009. To join the index, companies must be worth at least $4 billion and have four consecutive profitable quarters, among several other requirements.
Akerson's speech at Notre Dame comes a day after GM's stock topped its November 2010 initial public offering price of $33 for the first time in more than two years.
Investors appear to be less concerned about GM's troubles in Europe than they were last year, when the stock briefly dipped below $19, and they seem to be encouraged by the potential of GM's new Chevrolet Silverado and GMC Sierra pickup trucks.
Akerson said the automaker is still "in the early innings of our recovery," but he said the progress is real. He also said GM needs to boost the profit margins of its Cadillac brand, partly through expanding sales in China. And he said it was "starkly evident" that GM needed a massive overhaul of its information technology structure to reduce its reliance on outsourcing.
The automaker is hiring 4,000 workers at four new software innovation sites throughout the country, including one in Warren, and another 5,000 former Hewlett-Packard employees who were previously conducting work for GM.
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