Moody's puts GM on review

Moody's Investors Service said it placed the Ba2 senior unsecured rating of General Motors Corp. and the Ba1 senior unsecured rating of General Motors Acceptance Corp. under review for a possible downgrade.

Moody's said the review was prompted by the concern that the potential pressure on GM posed by the Chapter 11 bankruptcy filing by Delphi Corp. and the continued erosion in U.S. automotive market conditions may severely constrain the company's ability to re-establish profitability and cash flow.

Moody's review will focus on the company's ability to address a number of challenges that include managing potential risks resulting from the Delphi bankruptcy process, Moody's said.

In order for GM to preserve the Ba2 rating, the company's business model and recovery plan will have to be capable of maintaining U.S. market share of approximately 25% and delivering strong market acceptance and sustaining healthy price realization for new products, Moody's said.

Moody's Ba1 rating of GMAC represents a one-notch distinction from GM's rating. GMAC's condition and performance is closely tied to the fortunes of GM due to the direct and indirect exposures and business connections between the two companies, Moody's said.

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