The car crusher

Speculation that Ford and GM may find themselves downgraded to junk later this year has driven auto spreads dramatically wider, but wary investors have not been tempted to take advantage of the cheapness of the debt


After a couple of years of highly respectable returns in the corporate bond market, spreads have finally begun to bleed out, due almost entirely to a plethora of problems at the domestic automobile manufacturers. Just a month after General Motors reduced its earnings expectations, the carmakers’ annual talk with labor leaders failed to shift the burden of their health-care costs, pushing share prices to their lowest levels in 12 years.

Even though the broader market has been resilient—as the

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