* GM confirms receipt of subpoenas:
GM confirmed that it received subpoenas from the SEC concerning pension
accounting practices, retiree benefits, transactions with suppliers, and
any obligation GM may have to fund pensions and other employee benefits
at Delphi, now in Chapter 11.
* GMAC receives insurance-related subpoenas:
GM also said that GMAC received subpoenas from the SEC in connection with
a probe of insurance industry practices regarding insurance policies.
* SEC investigation increases risk:
While this investigation increases risk, it remains unclear whether there
could be a material negative impact on GM or GMAC. We believe one possible
negative impact of the investigation could be a delay in the possible sale
of a stake in GMAC, since the potential buyer might want to be assured that
it is not incurring inordinate risk.
* Reiterate Underperform on GM:
We recently downgraded GM to "B+" from "BB". We continue to consider GM to
be "Underperform", rate GM "B+", and maintain a "Deteriorating" Credit
Trend. We recommend that investors reduce exposure to GM bonds maturing
later than 2010 that we believe are most exposed to downside credit and
price/spread risk.