Fitch Assigns a Rating of 'BB+' to GM's Amended Credit Facilities

Fitch Ratings has assigned a rating of 'BB+' to General Motors Company's (GM) amended unsecured credit facilities. Fitch currently rates GM's Issuer Default Rating (IDR) 'BB+'. The Rating Outlook is Positive.

Fitch has also affirmed and withdrawn the 'BB+' IDR of GM's General Motors Holdings LLC (GM Holdings) subsidiary, as there is no longer any rated debt at the subsidiary, and Fitch does not expect the subsidiary to be an active issuer going forward. Fitch has also withdrawn GM Holdings' unsecured credit facility rating of 'BB+' as the subsidiary is no longer a borrower on the facilities.

A full list of the ratings of GM and its subsidiaries is provided at the end of this release.

KEY RATING DRIVERS

GM announced today that it has closed on an amendment to its unsecured revolving credit facilities. As part of the amendment, the primary borrower for the facilities has been moved to GM from GM Holdings, simplifying the company's capital structure. The amended facilities continue to consist of a three-year tranche that has been extended to 2017, and a five-year tranche that has been extended to 2019. However, the limit on the three-year tranche has been reduced to $5 billion from $5.5 billion, but the limit on the five-year tranche has been increased to $7.5 billion from $5.5 billion, resulting in a net $1.5 billion increase in the facilities to $12.5 billion. General Motors Financial Company, Inc., which has been a subsidiary co-borrower on the three-year tranche has been added to the five-year tranche as well.

Among the other modifications to the facilities, the recent upgrade by another rating agency triggered the removal of the facilities' borrowing base restrictions, but the other financial covenants remain in place, namely a requirement to maintain global liquidity at or above $4 billion and to maintain domestic liquidity at or above $2 billion. The amended credit facilities do not have any upstream guarantees from GM's subsidiaries, but if GM's IDR (or equivalent) is rated below investment grade by two of the three major rating agencies, guarantees from GM's substantial domestic subsidiaries (excluding GM Holdings) will be put into effect, although the facilities will remain unsecured. Aside from the changes mentioned above, Fitch views the other modifications to the amended credit facilities as relatively minor.

GM's ratings are supported by the auto manufacturer's low automotive leverage, strong liquidity position, reduced pension obligations and strengthened product portfolio, as well as the free cash flow (FCF) generating capability of its automotive operations. GM's ratings are further supported by the global diversity of its business, including a strong market position in key developing markets, such as China and Latin America.

The Positive Outlook reflects the trajectory of the underlying trends in GM's core business. Fitch expects the profitability of the company's North American operations to increase on a combination of pricing strength and operational efficiency, while its European operations appear to be on track to meet or exceed the company's mid-decade break-even target. The company's Chinese joint ventures (JVs) remain an important source of cash despite heightened competition in that market. In addition, the funded status of the company's pension plans has improved materially over the past several years, and its work on de-risking the plans will reduce volatility in the pension liability going forward.

Fitch's primary concern continues to be the potential for the substantial number of recalls announced in the first half of 2014 to result in significant cash costs over the intermediate term. Although the direct costs of the recalls will be material, Fitch views them as manageable given GM's substantial liquidity position. Fitch's greater concern is the large number of lawsuits and various investigations that have been initiated in the recalls' wake, which could potentially have a significant effect on the company's intermediate-term cash flow and liquidity, particularly if combined with an unexpected slowdown in the global auto market. Other concerns include GM's North American profitability, which, although improved, continues to lag certain key competitors, as well as significant restructuring activities that remain underway in various international regions.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to a positive rating action include:

--Increasing the North American EBIT margin to near 10% on a sustained basis.

--Improving the profitability of the company's European operations.

--Sustained positive FCF generation, excluding unusual items.

--Increased clarification that the follow-on costs of the recalls can be managed while keeping automotive cash liquidity at $20 billion or higher.

Negative: Future developments that may, individually or collectively, lead to a negative rating action include:

--A decline in cash liquidity below $20 billion for a prolonged period.

--Significant negative developments related to the recalls that result in a greater-than-expected cash outflow.

--A sustained period of negative FCF generation.

--A change in financial policy, particularly around maintaining high liquidity and low leverage.

--A need to provide extraordinary financial assistance to GMF in the case of a liquidity event at the finance subsidiary.

Fitch currently rates GM and its subsidiaries as follows with a Positive Outlook:

GM

--Long-term IDR at 'BB+';

--Unsecured credit facility rating at 'BB+';

--Senior unsecured notes rating at 'BB+'.

General Motors Financial Company, Inc.

--Long-term IDR at 'BB+';

--Senior unsecured debt at 'BB+';

--Short-term IDR at 'B'.

GMAC Bank GmbH

--Long-term IDR at 'BB+';

--Senior unsecured debt at 'BB+';

--Short-term IDR at 'B';

--Commercial paper at 'B'.

GMAC (UK) Plc

--Long-term IDR at 'BB+';

--Short-term IDR at 'B';

--Short-term debt at 'B'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage' (May 28, 2014).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=901514

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