MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services said its 'B'
corporate credit and senior unsecured debt ratings and 'BB-' senior secured debt
rating on General Motors Corp. (GM) remain on negative watch, following the
group's announcement of a series of cost reductions and other initiatives.
On Tuesday, GM announced it will lay off salaried workers, cut truck
production, suspend its dividend and borrow $2 billion to $3 billion to weather
a severe downturn in the U.S. market.
GM also said the moves will raise $15 billion to help cover losses and turn
around its North American operations, including $10 billion from internal
cost-cutting and $5 billion from selling some assets and borrowing against
others.
S&P said the negative watch reflects its concerns about the financial damage
being inflicted by deteriorating U.S. industry conditions-largely as a result of
high gasoline prices.
The ratings agency added it will review GM's business and financial
prospects, including liquidity, in light of GM's announcement Tuesday, and the
general U.S. and global automotive industry conditions to resolve the
creditwatch review.
However, given the severe risks created by weak prospects for U.S. auto
demand for the rest of 2008 and for 2009, the possibility of a downgrade of more
than one notch cannot be dismissed, S&P noted.
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