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GM $1.0 Billion Commercial Paper Rated 'F-1' By Fitch - Fitch Financial Wire -

20 August 1997

GM $1.0 Billion Commercial Paper Rated 'F-1' By Fitch - Fitch Financial Wire -

    NEW YORK, Aug. 20 -- General Motors Corp.'s (GM) $1.0 billion
commercial paper program is rated "F-1" by Fitch.  GM's senior debt is
affirmed at "A" and its preference shares and Capital Trust D and Capital
Trust G trust originated preferred securities (TOPRS) are affirmed at "A-."
    GM may have up to $1.0 billion of commercial paper outstanding at any time
which will benefit from the informal backup of GM's $3.0 billion revolving
credit facility.  The company plans to issue commercial paper to manage
liquidity, to enhance funding flexibility and to lower its blended cost of
capital.
    GM has made substantial progress in restoring its profitability by
lowering domestic structural costs and overseas volume growth.  These trends
are likely to continue, as the company drives to implement common and lean
operating and product development systems worldwide, and align its capacity
with market opportunities.  GM continues to heighten its focus on its core
automotive business, and Fitch considers the EDS spin-off, the pending Hughes
Electronics restructuring and the potential partial sale of its Delphi/Delco
components business as largely neutral with respect to creditor protection.
    The company has also restored its financial position and improved
flexibility: expensive debt and preferred issues have been reduced, pension
plans are economically funded, and downturn preparedness includes a
$14.9 billion cash cushion at midyear 1997.  Capital spending to support
growth has leveled out, although the mix has shifted towards growth
opportunities in high-potential overseas markets.  Creditor protection remains
above average at the top of the cycle, with EBITDA covering interest by
12 times (x) for the twelve months ended June 30, 1997, and debt/EBITDA a
reasonable 0.71x at that date.  Fitch considers that GM can remain self-
funding throughout a moderate U.S. downturn.
    GM still faces challenges in improving domestic profitability to its
target 5.0% net income return on sales.  Although the company continues to
launch products more aligned with market trends, it has been difficult to
reverse its U.S. marketshare erosion.  Further, surgically targeted labor
actions have impeded progress in raising productivity and have taken their
toll in lost production and profits.

SOURCE  Fitch Investors Service