Moody's keeps GM on review for possible downgrade

Moody's Investors Service said the ratings of General Motors Acceptance Corp. (Ba1/ review direction uncertain), General Motors Corp. (B1/review for possible downgrade) and Residential Capital Corp. (Baa3/review direction uncertain) remain under review.

GM plans to sell a controlling stake in GMAC to an investment-grade strategic investor, but Moody's said that the passage of time suggests the difficulty of successfully completing the transaction and may indicate a declining probability that it can be structured in such a way as to lead to an upgrade of the current Ba1 rating.

Moody's also said it views positively the company's announcement that it will revise its salaried health care and pension benefit plans, reduce its dividend and cut executive compensation, but the likely near-term impact of these actions is not considered to be of sufficient magnitude to offset the concerns cited in the pending review of GM's ratings.

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