Hedge funds jitter as motor giants crash into skid row

distressed debt

The downgrade last month of General Motors and Ford by Standard & Poor's may prove the biggest story in hedge funds in 2005.

Immediately following the downgrade to junk status by Standard & Poor's, unconfirmed talk swirled of groups such as GLG, and Highbridge Capital and then denied suffering heavily from GM's demotion from BB to BBB- and Ford's decline from BBB- to BB+.

While another downgrade would relegate nearly $500bn to junk status and eject GM and Ford from the Lehman Brothers' High Yi