General Motors' 8.375% '33 bonds fell two points to the 75-76 range on news that the Securities and Exchange Commission is investigating the company in connection with its financial reporting of pension and other employment benefits, as well as certain transactions between the company and Delphi. In a release, it said the SEC investigations include matters relating to GM's recovery of recall costs from suppliers and supplier price reductions, as well as any obligation it has to fund pension and other post-employment benefits in relation to Delphi's bankruptcy proceedings. GM's finance unit, General Motors Acceptance Corp., has also received subpoenas in connection with the SEC's wider investigation of the insurance industry's use of finite risk insurance. GMAC's 6.75% '14 bonds fell a point to 96 1/2. A spokesman declined to comment further on the investigation.
The SEC probe is another piece of bad news for General Motors, which has seen its financial results hurt by soaring labor costs and falling sales revenue. The company posted a $1.1 billion loss in the third quarter of 2005, compared with net income of $315 million in the same period last year.