Moody's may cut GM, GMAC

Moody's Investor's Service said it is reviewing the Baa1 long-term rating of General Motors Corp. and the A3 long-term rating of General Motors Acceptance Corp. for possible downgrade.

The Prime-2 short-term ratings of GM and GMAC are not under review and are affirmed at the current level.

The review of GM's rating reflects Moody's view that the company's credit metrics are weak for the current rating level and are likely to display only marginal overall improvement during 2005.

Moody's said the company's prospects through 2005 are burdened by the high inventory levels of its North American operations and by the need to stem the continued losses within Europe. A significant longer-term challenge is also posed by the company's large retiree base and the resulting high level of health care costs.

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