Moody's may downgrade GMAC, ResCap

Moody's Investors Service said its review for possible downgrade of General Motors Acceptance Corp.'s Ba1 long-term rating and Residential Capital Corp.'s Baa3 long-term and Prime-3 short-term ratings will continue. This follows General Motors Corp.'s announcement that it has entered into an agreement to sell a 51% stake in GMAC to a consortium led by Cerberus.

The ratings of General Motors are unchanged.

Moody's said it does not view the consortium as a "strategic" investor in the context that it had set out in its prior commentary on the potential sale transaction, and therefore no benefit from external support accrues to the GMAC ratings as the result of the change in ownership.

Moody's said it believes that aspects of the sale transaction have positive implications for GMAC's standalone credit profile: a reduction in GMAC's unsecured direct exposure to GM, a potential strengthening of GMAC's liquidity and funding profile and the agency believes the transfer of board control to Cerberus enhances the control and governance environment at GMAC to a sufficient degree as to result in de-linkage of GMAC's ratings from GM's ratings upon closing.

However, Moody's expects that GMAC's business relationship with GM will continue to be the cornerstone of its business model under new ownership. Thus, GMAC will continue to be exposed, both directly and indirectly, to conditions at GM.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.