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Tension is rising between General Motors bondholders and the U.S. government as they move toward a March 31st deadline to restructure GM's $27.5 billion of debt.
The advisors to GM's bondholders put out a statement saying their goal is a "viable and competitive GM", and that they "stand ready to do their part." Their words come in response to comments made to the Detroit Free Press by Steve Rattner, the leader of Obama's auto task force.
He told the Michigan newspaper "I think the bondholders are being quite difficult," and "I feel the UAW is behaving in a very constructive way." The UAW is the United Auto Workers union which represents GM's hourly employees.
GM [GM
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] must reach new agreements with both the UAW and the bondholders, in order to satisfy conditions set by the U.S. government when they gave the automaker a multi-billion dollar bridge loan.
The original plan suggested the bondholders accept 30 cents on the dollar in a debt for equity swap, while the UAW would receive 50 cents on the dollar, also in the form of equity. Bondholders believe the pain should be more equitable.
Bondholders include numerous mutual funds and pensions funds, including Calpers of California, Franklin Resources, and Fidelity Investments.
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