S&P keeps GM on watch

Standard & Poor's said the B long-term and B-3 short-term corporate credit ratings on General Motors Corp. remain on CreditWatch with negative implications, where they were placed on March 17.

The watch update follows the downgrades of 49%-owned subsidiaries GMAC LLC (B/negative/C) and Residential Capital LLC (CCC+/Watch negative/C).

S&P said it does not expect GM to provide any significant capital to GMAC or indirectly to ResCap, nor is GM required to do so in the future.

Ratings do not incorporate any transfer of substantial capital to GMAC, and the agency said it does not believe there are any rating triggers or other mandatory calls on GM's cash caused by the GMAC or ResCap downgrades or if ResCap were to default.

The strike at major supplier American Axle & Manufacturing Holdings Inc., which triggered the watch, has lasted two months and forced production shutdowns at several GM plants. GM workers also began a strike last week over local work issues at an assembly plant in Delta Township, Mich.

S&P said it expects labor issues to be resolved, but the timing and effect on GM's liquidity is unknown.

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