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Moody's drops GM to Caa1
Moody's Investors Service said it lowered General Motors Corp.'s corporate family and probability-of-default ratings to Caa1 from B3, senior unsecured rating to Caa2 from Caa1 and senior secured credit facility to B1 from Ba3.
The company's speculative grade liquidity rating remains SGL-2.
The outlook is negative.
GMAC LLC ratings are not affected by this action and its corporate family rating remains at B3 with a negative outlook.
Moody's said the downgrade reflects challenges in reestablishing a competitive position in the U.S. automotive market and generating positive operating cash flow.
"GM has a pretty good track record in achieving its cost reduction targets and structuring transactions that help raise capital," Bruce Clark, senior vice president with Moody's, said in a written statement. "It's reasonable to expect that the plan being implemented now will help strengthen the company's liquidity position, which otherwise could have become very strained by late 2009."
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