GMAC Returns to Capital Markets, Raises $2 Billion
GMAC Financial Services received a major cash infusion this week, raising $2 billion through a bond issue Wednesday, Feb. 10, CEO Michael Carpenter told Automotive News.
The transaction represents the first time GMAC has been able to access the capital markets since May 2007 and is a major step toward profitability, Carpenter said.
The bond sale also puts GMAC's objective of paying off the U.S. Treasury Department's 56 percent share of the company within the lender's sights.
Several ratings agencies recently upgraded GMAC's debt rating multiple levels. The goal is for those ratings to reach investment grade. And although GMAC has “a way to go,” Carpenter said it could happen within a year to 18 months.
When the ratings reach investment grade, an initial public offering of the company would be possible, he said.
GMAC's debt ratings have not been investment grade since 2005, a GMAC spokeswoman said. The higher ratings allow the company to lower its cost of capital.
Recent upgrades made GMAC more appealing to investors. The vote of confidence from the rating agencies followed the Treasury Department's additional $3.79 billion investment in GMAC in December.
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