Moody's: Deal good for GM

Moody's Investors Service said that it views positively news that General Motors Co. and the United Auto Workers Union have reached a tentative agreement.

The announcement of the tentative agreement does not have any immediate impact on ratings as the terms of the proposed new contract have not been made public and the agreement must be presented to General Motor's about 50,000 union workers for a ratification vote, Moody's said.

The agency said that completion of a union contract that preserves the cost and operating competitiveness of General Motor's North American operations is critical to potential improvement in the company's corporate family rating of Ba2 and secured credit facility rating of Baa3.

As specific details of the contract are disclosed, Moody's said it will assess the degree to which the agreement preserves the company's operating flexibility, competitive cost structure and low break-even level.

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