GM hopes to raise billions in new bond offering amid coronavirus pandemic

General Motors is taking steps to shore up its balance sheet as the coronavirus keeps plants shuttered and auto sales depressed, the company said Thursday.

The company is issuing senior unsecured fixed rate notes with the target amount in the low billions, according to a person familiar with the plans who requested anonymity because details have not been made public.

GM declined to comment on the offering other than saying the proceeds will be used for “general corporate purposes.” Deutsche Bank Securities, which is managing the offering, did not immediately respond for comment. 

Shares of GM were up 2.4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} during morning trading to $22.41. The stock is down 39.3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in 2020 as the coronavirus has devastated vehicle sales and shuttered auto plants. 

Preliminary documents for the bond offering were filed with the SEC on Thursday, a day after the automaker reported a first quarter profit of $294 million.

GM had available liquidity of $33.4 billion to end the first quarter. That includes cash, cash equivalents, marketable debt securities and funds available under credit facilities for its automotive operations.

The offering follows several other actions the automaker has taken to save cash and bolster its balance sheet.

GM last week suspended its quarterly dividend and share repurchase program. It also extended $3.6 billion under its three-year revolving credit agreement to April 2022.

In March, GM drew down $16 billion from its revolving credit facilities to strengthen its cash positions. It also disclosed last month that it signed a 364-day revolving credit agreement of $1.95 billion for exclusive use by GM Financial, the company’s auto lending arm.