Shortly after the Canadian Auto Workers union inked a concessions deal with General Motors, its president, Ken Lewenza, said he still expects a Chapter 11 filing. Bondholders are clearly recalcitrant, but, IMO, they’re playing a crapshoot.
The Chrysler bankruptcy is too new to offer any insight, and these bondholders are nowhere near the top of the creditor list anyway. If they want to hold out, they could get even less in a bankruptcy.
Besides that, GM bonds are trading for pennies on the dollar, and its stock is now below a buck fifty.
Obama sez he wants to see GM restructuring plans by the end of the weekend. That said, I repeat that, unless he raises the gas tax, his industrial policy for autos is a flop.
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