Fitch rates GM loan BB+

Fitch Ratings said it assigned a BB+ rating to the new $5 billion five-year secured revolving credit facility of General Motors Holdings LLC, a wholly owned subsidiary of General Motors Co. The agency also assigned a BB- issuer default rating to GM Holdings and affirmed GM's BB- issuer default rating.

The outlook is stable.

The agency said the rating assigned to the revolver, which is two notches above GM Holdings' issuer default rating, is based on the facility's substantial collateral coverage, which includes a first-priority security interest in most of the U.S. assets of GM and its material U.S. subsidiaries. Fitch views the new credit facility as a positive enhancement to GM's liquidity position.

The issuer default ratings of GM and GM Holdings reflect the auto manufacturer's strong liquidity position, low leverage, improved cost structure and increasingly competitive product portfolio, Fitch said.

However, the agency said GM continues to face a number of challenges over the next several years, including projected weak industry volume growth, heavily underfunded pension obligations, continued cash needs tied to the restructuring of its European operations and an increasingly stringent global regulatory environment that is forcing rapid technological change and that will ultimately necessitate a transition in the company's key product offerings.

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