Moody’s gives negative outlook to GM and GMAC

Moody’s Investors Service has changed the outlook of both General Motors and its financing arm, GMAC, to negative from stable. The change in outlook follows the announcement that GM has agreed to pay Fiat, the Italian-based car manufacturer, €1.55 billion ($2 billion) to terminate the Master Agreement between the companies and to realign its industrial relationships.

Although the €1.55 billion payment does not represent a significant erosion in GM’s automotive liquidity position of $23 billion, says Moody’s, this outflow comes as the company is facing increasing challenges in its competitive and operating environment.