Everyone assumes that GM is going to file for Chapter 11 bankruptcy on June 1. The company has even stated that it will file if 90% of the bondholders don't agree to the exchange offer of 225 shares of GM common stock for each $1000 of par value of bonds. That 90% exchange is very unlikely.
That leaves the question will GM really file? The bonds that mature on June 1 have $1 billion outstanding. There isn't another maturity until Jan 2011. If GM pays off these bonds, the company can avoid bankruptcy for 18 months.
The bonds are $25 par and trade at $2.50. It is most likely that GM will file bankrupcy, but if they don't, the bonds will be paid off at $25 each + the final interest payment 0f $.18.
That is a 10 to 1 payoff. Worth the risk. Symbol for the GM bonds is GRM.
Disclosure: Long GRM and BGM.