General Motors Corp.'s Proposed $4.48 Bil. Bank Facility Rated 'B+'; Recovery Rating '1'

NEW YORK, June 20 -- Standard & Poor's Ratings Services today said it had assigned its 'B+' bank loan rating to General Motors Corp.'s (GM) proposed $4.48 billion senior bank facility, expiring 2011, with a recovery rating of '1'. The bank loan is rated one notch higher than the corporate credit rating. This and the '1' recovery rating indicate that lenders can expect full recovery of principal in the event of a payment default. (For the complete recovery analysis, please see Standard & Poor's recovery report on GM, to be published on RatingsDirect immediately following this report.)

At the same time, Standard & Poor's lowered its senior unsecured debt rating on GM to 'B-' from 'B'. The downgrade of the unsecured debt stems from the pending secured bank transaction, which disadvantages the unsecured debt. All ratings on GM, including the 'B+' bank loan rating--but excluding the '1' recovery rating -- are on CreditWatch with negative implications.

The new secured facility provides the company with approximately the same size bank facility as its existing $5.6 billion facility, but with more certain access and a longer maturity. Unlike the previous unsecured facility, we would expect GM to borrow from time to time under the new revolving credit facility for operating needs. We estimate that the absolute recovery prospects for the unsecured creditors is in the mid-50% area. In addition, the disadvantage to the unsecured debtholders is reflected by priority claims to adjusted assets in the low 20% area.

We expect GM's ratings to remain on CreditWatch for several more months. Court hearings on Delphi Corp.'s motion to reject its labor contracts have now been adjourned until Aug. 11, and hearings on Delphi's request to reject unprofitable supply contracts with GM have been postponed also until Aug. 11. We expect negotiations between Delphi, the United Auto Workers, and GM to continue, however. Still, we could lower GM's ratings at any time if evolving events at Delphi warrant -- and an interim downgrade is possible prior to resolution of the CreditWatch. Although the proposed bank facility is considered an incremental positive for GM's liquidity, even prior to establishment of the new bank facility, we believe GM's liquidity should remain adequate to meet near-term funding requirements. For a more detailed discussion of the GM CreditWatch, please see our release dated June 13, 2006.

  RATINGS LIST

  General Motors Corp.

  Corporate credit rating B/Watch Neg/B-3

  Rating Assigned

  $4.48 billion secured bank loan B+/Watch Neg

  Recovery rating 1

  Rating Lowered To From

  Senior unsecured debt B-/Watch Neg B/Watch Neg

  Ratings Remaining On CreditWatch With Negative Implications

  Corporate credit rating B/Watch Neg

  Short-term rating B-3/Watch Neg

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.

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