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GM Bonds Increased to `Buy' by JPMorgan Debt Analysts

July 22 (Bloomberg) -- JPMorgan Chase & Co. raised its recommendation on the bonds of General Motors Corp., the largest U.S. automaker, to ``buy'' from ``sell,'' saying they have become cheap relative to rivals and the rest of the market.

``Due to its considerable liquidity options as well as its vastly improved products, we believe GM is a sustainable entity,'' New York-based analysts Eric J. Selle and Atiba T. Edwards wrote in a report today. ``We see more upside potential than downside risk at current levels.''

GM, buffeted by three years of losses, seeks to conserve cash and avert bankruptcy as a slowing economy and record gasoline prices push U.S. industry sales to a 15-year low. The Detroit-based automaker said last week it will suspend its dividend for the first time since 1922, cut the management payroll by 20 percent and sell assets to raise at least $15 billion in the next 18 months.

GM's auto sales and product mix may ``stabilize'' as banks pass on lower interest rates for consumer loans and gas prices level off, the JPMorgan analysts wrote. Options for boosting liquidity include passing on pension costs, accessing capital markets, asset sales, equity injections and further cost cutting, they wrote.

GM has said it is trying to raise $2 billion to $4 billion in additional liquidity with asset sales and $2 billion to $3 billion of new financing secured by assets such as foreign subsidiaries, brands and its remaining stake in GMAC LLC.

Among the assets GM may consider selling are its OnStar communication system division or the GM Asset Management investment company, Citigroup analyst Itay Michaeli wrote in a research note on July 15.
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