S&P; Reviewing Outlook on GM’s Debt Rating

Standard & Poor’s affirmed General Motor Corp.’s debt rating, but the rating firm said it was considering changing GM’s outlook, in what could be a preliminary step toward cutting the world’s largest automaker’s rating to junk status.

The move came a day after GM said it expected earnings to fall this year as healthcare costs rise and interest rates crimp profit at its financial arm, General Motors Acceptance Corp.

GM, which had about $291 billion of debt outstanding as of Sept. 30, is one of the largest corporate bond issuers in the United States.

A reduction to junk status could lift its borrowing costs dramatically and leave portfolio managers with billions of dollars of losses.

Shares of GM slipped 19 cents to $37.13 on the New York Stock Exchange.