Tuesday, January 6, 2009
GMAC Bond-Equity sorta flops... but they get the money anyway.
http://www.bloomberg.com/apps/news?pid=20601087&sid=am4IwraGSAW0&refer=home
"Dec. 31 (Bloomberg) -- GMAC LLC, the auto lender that’s getting a $6 billion federal bailout, completed a debt swap designed to bolster its capital after falling short of its $38 billion goal.
About 59 percent of its old notes eligible for the swap and 39 percent of the debt from its Residential Capital unit were tendered, according to a statement from Detroit-based GMAC today. The goal was 75 percent. "
"GMAC and Residential Capital had some of their debt rated SD, or “selective default,” by Standard & Poor’s to reflect results of the swap. The downgrade from CC was made because bondholders that signed up for the exchange received less than their original investment, and the swap “left untendered bonds in a subordinated position to the new notes,” S&P said today in a statement. "
"GMAC, responsible for financing about 35 percent of GM’s retail customers last year, said it will now lend to vehicle buyers with credit scores of 621 or higher, compared with a previous standard of at least 700. The higher threshold had excluded about 42 percent of U.S. consumers. "
"GMAC ran short of cash this year after $7.9 billion of losses over five quarters, mostly from record defaults on subprime mortgages, which are made to homebuyers with the worst records. The lender was shut out of credit markets and had to limit lending only to people with the top repayment histories."
...
Well... now GMAC is an investment bank. Question is, what lunatic would deposit money into GMAC now? ... other than government bodies of course.
Still, if the government just keeps giving it money, that's more than good enough, right?
Heh. Looks like GMAC management were not satisfied with getting defaults from subprime loans... they are aiming to get defaults on their car loans too? ... lowering lending standards... well, of course that was part of the Terms and Conditions of that TARP loan, so, they can't help it... but... geez.
... 42% of US consumers have credit scores below 700? ... ok... I need someone to translate to me what that means exactly.
Anyhow... bottom line is:
Problem: US car industry needs people to buy cars. And pay for them.
Problem: Cars are cyclical. And we're entering a natural downturn, even without the recession.
Problem: How many cars does one family need, really?
"Dec. 31 (Bloomberg) -- GMAC LLC, the auto lender that’s getting a $6 billion federal bailout, completed a debt swap designed to bolster its capital after falling short of its $38 billion goal.
About 59 percent of its old notes eligible for the swap and 39 percent of the debt from its Residential Capital unit were tendered, according to a statement from Detroit-based GMAC today. The goal was 75 percent. "
"GMAC and Residential Capital had some of their debt rated SD, or “selective default,” by Standard & Poor’s to reflect results of the swap. The downgrade from CC was made because bondholders that signed up for the exchange received less than their original investment, and the swap “left untendered bonds in a subordinated position to the new notes,” S&P said today in a statement. "
"GMAC, responsible for financing about 35 percent of GM’s retail customers last year, said it will now lend to vehicle buyers with credit scores of 621 or higher, compared with a previous standard of at least 700. The higher threshold had excluded about 42 percent of U.S. consumers. "
"GMAC ran short of cash this year after $7.9 billion of losses over five quarters, mostly from record defaults on subprime mortgages, which are made to homebuyers with the worst records. The lender was shut out of credit markets and had to limit lending only to people with the top repayment histories."
...
Well... now GMAC is an investment bank. Question is, what lunatic would deposit money into GMAC now? ... other than government bodies of course.
Still, if the government just keeps giving it money, that's more than good enough, right?
Heh. Looks like GMAC management were not satisfied with getting defaults from subprime loans... they are aiming to get defaults on their car loans too? ... lowering lending standards... well, of course that was part of the Terms and Conditions of that TARP loan, so, they can't help it... but... geez.
... 42% of US consumers have credit scores below 700? ... ok... I need someone to translate to me what that means exactly.
Anyhow... bottom line is:
Problem: US car industry needs people to buy cars. And pay for them.
Problem: Cars are cyclical. And we're entering a natural downturn, even without the recession.
Problem: How many cars does one family need, really?
Labels: Debt, General Motors
Jasonred79 invested at
6:38 AM
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