S&P Assigns BB+ to GM Revolver

General Motors said the new $5 billion facility will "remain generally undrawn."
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General Motors'

newly-acquired $5 billion revolving credit facility received a "BB+" rating from Standard & Poor's, which is two notches higher than the automaker's corporate rating.

The ratings agency said the five-year credit facility, which

GM announced Thursday, is collateralized by various domestic assets including accounts receivable, inventory parts and equipment and shares in foreign subsidiaries.

The automaker said the credit facility will likely "remain generally undrawn." S&P spokesman Robert Schulz said that is common practice. "Most companies think of revolvers as dry powder for seasonal working capital, rainy days, acquisitions or timing of cash inflows," he said.

S&P has a "BB-"rating on the parent company. In the case of the credit facility, "we believe lenders would receive very high (90% to 100%) recovery of principal in the event of a default," the agency said.

-- Written by Ted Reed in Charlotte, N.C.

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Ted Reed