S&P Hikes GM’s Credit Rating

Standard & Poor’s has raised its corporate credit rating on US automaker General Motors Co. (GM), noting the company’s new labor contract would ensure its profitability and cash flow in North America in the wake of the global financial crisis.

Ratings service firm Standard & Poor’s (S&P) on Thursday raised its corporate credit rating on US automaker General Motors Co. (GM), noting the company’s new labor contract would ensure its profitability and cash flow in North America.

In a statement, S&P said it has revised GM’s credit rating by two notches from BB- to BB+ after it has ratified a new four-year labor contract with the United Auto Workers union.

The ratings firm also raised the automaker’s outlook to “stable” from “positive”.

“GM has a two-year track record of profits and cash flow generation in its global automotive operations, supported by strong performance in North America,” the agency said in the statement.

Earlier, GM and UAW signed a new labor contract as part of the company’s commitment to provide workers with better benefits as it recover from bankruptcy.

Under the agreement, GM will provide workers better compensation and access to healthcare, as well as the possibility of higher profit-sharing.

The biggest US automaker also said that it would beef up the development of new products in its plants in Spring Hill Tennessee; Romulus and Warren, Michigan; and Wentzville, Montana.

It was the first contract agreement between GM and UAW since the car company declared bankruptcy protection from the US government in 2009.

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