General Motors Co. And Subsidiary Ratings Placed On CreditWatch Negative On Risks Related To The Coronavirus Pandemic

  • General Motors Co. (GM) announced that it would suspend its manufacturing operations in North America due to market conditions, to deep clean facilities and continue to protect people from the coronavirus pandemic. The suspension will last until at least March 30.
  • Consequently, we are placing all of our ratings on GM and its subsidiaries on CreditWatch with negative implications.
  • We expect to resolve the CreditWatch when we receive additional information about the effect of the coronavirus on the company's earnings and cash flow.
NEW YORK (S&P Global Ratings) March 25, 2020—S&P Global Ratings today took the rating actions listed above.
GM announced that it would suspend its manufacturing operations in North America due to market conditions, to deep clean facilities and continue to protect people from the coronavirus pandemic. The suspension will last until at least March 30. Because of the pandemic and the resulting economic pressure, we have lowered our regional light-vehicle sales forecast. Specifically, we now project that sales will decline by 15%-20% in the U.S. and Europe and by 8%-10% in China in 2020.
The CreditWatch negative placement reflects that there is at least a 50% chance we will lower our ratings on GM by one notch if its plants remain idle for longer than we expect, causing its cash flow generation to turn negative, eroding its liquidity, and increasing its debt leverage (debt to EBITDA over 3.0x) with no signs of an imminent improvement. We expect to resolve the CreditWatch listing over the next 90 days once we have a better understanding of how long the company's light-vehicle production and demand will remain depressed due to government efforts to contain the spread of the coronavirus.
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