Fitch rates General Motors notes BB+

Fitch Ratings said it assigned a rating of BB+ to General Motors Co.'s proposed senior unsecured notes issued in a private placement in up to three tranches, with five-year, 10-year and 30-year maturities.

The company's issuer default rating is BB+ with a positive outlook.

General Motors plans to use proceeds from the proposed notes to redeem 120 million shares of its series A preferred stock held by the United Auto Workers' Voluntary Employee Beneficiary Association for cash consideration of $3.2 billion.

Although the proposed notes will increase General Motors' automotive debt, Fitch said it expects General Motors' leverage (automotive debt/Fitch-calculated EBITDA) will rise only slightly above the June 30 level of 0.5 times, and leverage is likely to remain below 1 time over the intermediate term.

The transaction is expected to improve General Motors' automotive free cash flow going forward, as the proposed notes are likely to price well below the 9% dividend on the series A preferred stock, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.