General Motors Corp.'s Proposed $4.48 Bil. Bank Facility Rated 'B+'; Recovery Rating '1'
20 Juni 2006 - 8:09PM
PR Newswire (US)
NEW YORK, June 20 /PRNewswire/ -- Standard & Poor's Ratings
Services today said it had assigned its 'B+' bank loan rating to
General Motors Corp.'s (GM) proposed $4.48 billion senior bank
facility, expiring 2011, with a recovery rating of '1'. The bank
loan is rated one notch higher than the corporate credit rating.
This and the '1' recovery rating indicate that lenders can expect
full recovery of principal in the event of a payment default. (For
the complete recovery analysis, please see Standard & Poor's
recovery report on GM, to be published on RatingsDirect immediately
following this report.) At the same time, Standard & Poor's
lowered its senior unsecured debt rating on GM to 'B-' from 'B'.
The downgrade of the unsecured debt stems from the pending secured
bank transaction, which disadvantages the unsecured debt. All
ratings on GM, including the 'B+' bank loan rating--but excluding
the '1' recovery rating -- are on CreditWatch with negative
implications. The new secured facility provides the company with
approximately the same size bank facility as its existing $5.6
billion facility, but with more certain access and a longer
maturity. Unlike the previous unsecured facility, we would expect
GM to borrow from time to time under the new revolving credit
facility for operating needs. We estimate that the absolute
recovery prospects for the unsecured creditors is in the mid-50%
area. In addition, the disadvantage to the unsecured debtholders is
reflected by priority claims to adjusted assets in the low 20%
area. We expect GM's ratings to remain on CreditWatch for several
more months. Court hearings on Delphi Corp.'s motion to reject its
labor contracts have now been adjourned until Aug. 11, and hearings
on Delphi's request to reject unprofitable supply contracts with GM
have been postponed also until Aug. 11. We expect negotiations
between Delphi, the United Auto Workers, and GM to continue,
however. Still, we could lower GM's ratings at any time if evolving
events at Delphi warrant -- and an interim downgrade is possible
prior to resolution of the CreditWatch. Although the proposed bank
facility is considered an incremental positive for GM's liquidity,
even prior to establishment of the new bank facility, we believe
GM's liquidity should remain adequate to meet near-term funding
requirements. For a more detailed discussion of the GM CreditWatch,
please see our release dated June 13, 2006. RATINGS LIST General
Motors Corp. Corporate credit rating B/Watch Neg/B-3 Rating
Assigned $4.48 billion secured bank loan B+/Watch Neg Recovery
rating 1 Rating Lowered To From Senior unsecured debt B-/Watch Neg
B/Watch Neg Ratings Remaining On CreditWatch With Negative
Implications Corporate credit rating B/Watch Neg Short-term rating
B-3/Watch Neg Complete ratings information is available to
subscribers of RatingsDirect, Standard & Poor's Web-based
credit analysis system, at http://www.ratingsdirect.com/. All
ratings affected by this rating action can be found on Standard
& Poor's public Web site at http://www.standardandpoors.com/;
under Credit Ratings in the left navigation bar, select Find a
Rating, then Credit Ratings Search. Standard & Poor's, a
division of The McGraw-Hill Companies (NYSE:MHP), is the world's
foremost provider of independent credit ratings, indices, risk
evaluation, investment research and data. With more than 6,300
employees located in 21 countries and markets, Standard &
Poor's is an essential part of the world's financial infrastructure
and has played a leading role for more than 140 years in providing
investors with the independent benchmarks they need to feel more
confident about their investment and financial decisions. For more
information, visit http://www.standardandpoors.com/. DATASOURCE:
Standard & Poor's CONTACT: Media Contact: John Piecuch, New
York +1-212-438-1102; , Analyst Contacts: Robert Schulz, CFA, New
York +1-212-438-7808 Steven S Kerr, CFA, FRM, New York
+1-212-438-2732 Web site: http://www.standardandpoors.com/
http://www.ratingsdirect.com/
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