Negative rating outlook on GMAC maintained on weak ResCap performance - Moody's |
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Wed, 17 Oct 2007 07:50
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MUMBAI (Thomson Financial) - Moody's Investors Service maintained its negative rating outlook and affirmed GMAC LLC's 'Ba1' senior unsecured, not-prime short-term ratings after the ratings agency decided to raise the rating outlook for General Motors Corp to positive from negative.Moody's said its expectation that GM's operating fundamentals will improve with the implementation of its new labour accord has positive implications for GMAC's credit profile, given the extent and scale of GMAC's business ties to GM.However, weakened performance at Residential Capital LLC (ResCap), GMAC's residential mortgage finance subsidiary, continues to pose more immediate risks to GMAC's profile that warrants maintaining GMAC's negative rating outlook, the ratings agency said.ResCap's 'Ba1' senior unsecured rating is on review for possible downgrade, reflecting operating challenges and uncertainties regarding its funding and origination flows in its businesses due to continued volatility in the mortgage market.If ResCap's performance were to suffer additional setbacks, GMAC could decide to support ResCap financially, possibly to the detriment of its own stand-alone profile. If such support becomes probable, Moody's said it would equalise GMAC's ratings with ResCap's ratings.GMAC LLC is a Detroit-based provider of retail and wholesale auto financing, residential mortgage financing, and auto extended warranty and insurance products.TFN.newsdesk@thomson.comnpr/manCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Moody's boosts GM debt rating outlook 