Fitch puts GMAC, ResCap on positive watch

Fitch Ratings said it changed the Rating Watch status of General Motors Acceptance Corp., Residential Capital Corp. and related subsidiaries to positive from evolving following the announcement of a definitive agreement for the sale of a 51% stake in GMAC to an investor group led by Cerberus Capital Management LP. The deal will result in upfront cash proceeds of about $10 billion for General Motors Corp.

Fitch said the transaction benefits GMAC bondholders by removing contingent legal risks, such as those arising from the Pension Benefit Guaranty Corp. or potential for substantive consolidation in a GM bankruptcy, and creates avenues of growth for GMAC in businesses unrelated to GM such as residential mortgage, insurance and non-GM automotive financing.

The agency also said that while GMAC possesses some characteristics of an investment-grade company, its ongoing business relationship with GM brings with it an element of risk not generally evident with investment-grade issuers and that the proposed ownership structure, by itself, is not enough to warrant an investment-grade rating for GMAC.

© 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.