GMAC on negative watch on downsizing plan at Residential Capital unit - S&P |
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Thu, 18 Oct 2007 06:51
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MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services placed GMAC LLC's ratings on negative watch after the company said it would cut about 3,000 jobs, or 25 pct of the workforce, at its Residential Capital LLC mortgage unit.Residential Capital will consequently take a charge of about 100 mln usd in the fourth quarter.S&P said that though the downsizing may prove prudent over the longer term, the decision to contract the business and the agency's own concerns about the near and longer term prospects for Residential Capital prompted the watch listing.It added it is concerned about increasing uncertainty surrounding Residential Capital's downsized business model, as it would be challenging for the company to earn a satisfactory return by increasing its focus on higher quality, lower yielding asset types with funding dependence on the collateralized capital markets.Resolution of the watch listing will be driven by third-quarter results and company expectations for future results, S&P said.The ratings placed on watch include GMAC's 'BB+/B-1' counterparty credit rating. Residential Capital's 'BBB-/A-3' ratings were already on negative watch.tfn.newsdesk@thomson.comsim/jroCOPYRIGHTCopyright 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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Negative rating outlook on GMAC maintained on weak ResCap performance - Moody's 