S&P: Automakers able to tap liquidity

Standard & Poor's said that global automakers are still able to tap capital market liquidity despite the credit squeeze triggered by problems in the U.S. subprime mortgage market.

"In spite of the financial market turbulence, automakers in general continue to enjoy a strong industrial liquidity position, which we consider a necessity in this industrial environment characterized by huge working capital swings and high capital expenditures," said S&P credit analyst Maria Bissinger.

"They also have availability under their revolving credit facilities."

As the bond market is largely unavailable to the subinvestment-grade automakers, notably the U.S. players General Motors Corp. (B/Watch positive/B-3), Ford Motor Co. (B/Watch positive/B-3) and Chrysler LLC (B/Watch poitives), they have relied heavily on asset-backed securities financings in recent years, S&P said.

The auto loan ABS markets have not escaped the fall-out from the general reassessment of risk by investors, the agency said, adding that secondary and new issue auto loan ABS spreads have widened and have kept a lid on issuance.

"Nevertheless, we believe that the auto loan ABS market is accessible, albeit at a higher cost than in recent years," Bissinger added.

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