Deutsche Bank sent shares of General Motors Corp. into a tailspin Monday with a report saying the car maker's equity could be wiped out no matter what happens in coming months, but bonds of the company are signalling there may be some value in the franchise.
The benchmark GM bond due in 2033 yesterday rose ever so slightly, and now fetches 25 cents on the dollar. Granted, that's no sign of strength, but it does show that investors on the bond side believe that some sort of government cash injection would bail out the secured bondholders.
There's similar hope at AIG, where the insurance company now is getting more cash from the government at less punitive interest rates.
The upshot? When government comes calling with a bailout plan, you may be better off owning the bonds than the stock.
GM bonds signal all may not be lost
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