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Fitch downgrades GM
Fitch Ratings said it has downgraded the issuer default rating and senior unsecured debt of General Motors to B+ from BB.
The ratings also are placed on Rating Watch negative by Fitch pending developments in the financial and operating situation at Delphi.
The ratings of General Motors Acceptance Corp. and Residential Capital Corp. are not affected by the action and remain on Rating Watch evolving.
Ratings lowered and placed on negative watch include General Motors Corp. and General Motors of Canada Ltd.'s senior debt and issue default rating to B+ from BB. The short-term rating was withdrawn.
Ratings remaining on evolving watch include General Motors Acceptance Corp., GMAC International Finance BV, GMAC Bank GmbH, General Motors Acceptance Corp. of Australia, General Motors Acceptance Corp. of Canada Ltd. and General Motors Acceptance Corp. (N.Z.) Ltd.'s senior debt at BB and short-term at B, along with Residential Capital Corp.'s senior debt at BBB- and short-term at F3, and GMAC Bank's long-term deposits at BBB, senior debt at BBB- and short-term deposits at F3.
The downgrade primarily reflects concerns over further financial support and/or costs that GM may incur to ensure that Delphi is able to reach an agreement with the UAW, Fitch said.
In addition, Fitch said it expects that negative cash flow through at least 2006 could be exacerbated by potential non-operating items that would reduce GM's liquidity position and flexibility in undertaking any major restructuring program. A labor disruption at Delphi for any extended period would have an immediate impact on GM's ability to operate and would quickly reduce liquidity, Fitch said.
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