Guest post from Wyatt…
From 24 years of banking experience, I can tell you that this is done only after intense scrutiny of credit risk. It is a giant slap in the face of a customer - particularly in the unregulated lending sphere.
I imagine they will reinstate at junk bond - adjustable rates for future lines of credit (I presume this is a LOC).
However, this has been foreseeable. Think of the implications in the mutual fund market when all the GM paper is no longer attractive as part of their portfolios. This is happening in good times. Glad it is not 02 or 03
I imagine S&P and Moody will downgrade to junk shortly.
HT:Dad
Update: Appears that the news reports may have been too fast or something leaked out that should not have been made public. Hum!?
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