Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

MOODY'S CHANGES REVIEW OF GMAC'S LONG-TERM RATINGS TO "DIRECTION UNCERTAIN"; GM RATINGS REMAIN UNDER REVEIW FOR POSSIBLE DOWNGRADE

17 Oct 2005
MOODY'S CHANGES REVIEW OF GMAC'S LONG-TERM RATINGS TO "DIRECTION UNCERTAIN"; GM RATINGS REMAIN UNDER REVEIW FOR POSSIBLE DOWNGRADE

New York, October 17, 2005 -- Moody's announced today a change in the review status of GMAC's long-term debt ratings to "direction uncertain" from "review for possible downgrade." GMAC's long-term ratings had been placed under review on October 10, 2005. Moody's is also placing GMAC's Not-Prime short-term rating on review for possible upgrade. These rating actions are a consequence of GM's announcement that it will seek to sell a controlling stake in GMAC to a strategic partner. GM's Ba2 long-term ratings remain under review for possible downgrade.

In Moody's view, partial ownership of GMAC by a third party has the potential to enhance the degree of separation between the GM and GMAC ratings. This is possible, Moody's said, if the ownership change results in GMAC's governance structures being made more independent of GM's, if the potential partner is of sufficient financial and managerial strength, and if its interests are sufficiently aligned as to be complementary to GMAC's core auto and mortgage franchises. However, the ratings benefit could be minimal if, in Moody's view, these conditions are not adequately met. Additionally, Moody's noted that there is sizeable execution risk associated with such a transaction.

In the course of conducting its ratings analysis, Moody's has come to the view that GMAC's stand-alone credit profile would likely warrant a low-Baa long-term rating. This opinion is based upon GMAC's intrinsic qualities, setting aside considerations related to its ownership by GM. For GMAC's public debt ratings to fully converge with its stand-alone credit profile, Moody's believes that GM would be required to relinquish both majority ownership and majority control of GMAC to a satisfactory unrelated party. Inclusion of a partner in the ownership structure potentially strengthens the case for ratings separation if the partner already possesses auto financing operations, which makes the strategic nature of the tie-up more compelling, and in addition, is a large financial institution with a credit profile superior to that of GMAC's. Were such a partner to also demonstrate an ability and willingness to provide meaningful financial support to the enterprise, ratings could be strengthened further.

Moody's believes that a sale of a controlling interest in GMAC is likely to significantly reduce the annual dividend paid to GM. This dividend currently approximates $2 billion per year and, in the rating agency's view, is a critical factor in moderating the automotive operation's large rate of cash consumption which is likely to approximate $4 billion during 2005. The key issue in Moody's assessment of the impact of a GMAC sale on the credit quality of GM will be the diminution in the level of dividend received, balanced against the amount and use of proceeds from the sale. Use of proceeds could include a material reduction in debt, an increase in gross liquidity, or increased distributions to GM shareholders. Other factors that will be considered include GMAC's ability to continue providing adequate support for the financing of GM's retail and wholesale operations, and the potential for increased value in the retained GMAC investment over the long term.

Moody's believes that announcement of a tentative agreement between GM and the UAW to significantly reduce the company's healthcare costs is constructive. However, GM continues to face considerable challenges that will remain a focus of the rating agency's review. These include: managing the potential risks resulting from the Delphi bankruptcy; stemming the decline in North American market share; reducing employment levels and capacity to better match its sustainable North American market share position; contending with the shift in consumer preference from SUVs toward smaller, more fuel efficient vehicles; achieving adequate consumer acceptance for the critical T900 truck and SUV product launch; and, reducing its dependence on price incentives to prop up its sagging US share position.

Moody's view of GMAC's stand-alone low-Baa credit profile is supported by GMAC's capable risk management discipline, which functions relatively independently of GM. GMAC's asset quality has been very good historically, contributing to relatively stable operating performance in its financing operations and mortgage segments. Deterioration in the rate of auto loan net charge-offs during the last credit cycle, and improvements since, have been largely a function of loss severity associated with changes in the price of remarketed vehicles after repossession or lease termination. However, GMAC's significant concentration in GM vehicles is a key ratings constraint even on a stand-alone basis, as its credit metrics could worsen should demand for GM vehicles decline, leading to higher portfolio loss severity.

GMAC has also demonstrated strength in liquidity management, anticipating funding needs and preparing for contingencies in advance of GM's credit weakening. However, recent downgrades related to parent company stresses have negatively impacted GMAC's access to the unsecured debt markets, its primary source of funding, making the task of providing adequate liquidity more challenging. GMAC management has turned to greater use of alternative funding sources, notably securitization and whole loan sales, to help ease this constraint. In 1H'05, GMAC's acquisition of new finance assets slowed partially as a function of changes in GM's marketing programs, further relieving some liquidity pressure. In Moody's view, GMAC's committed borrowing facilities, in combination with substantial cash balances, cash flow from its short-duration auto finance assets and its access to the ABS markets, provide sound sources of alternative liquidity for its short-term obligations. Its mortgage subsidiaries also have unsurpassed access to the MBS markets.

In Moody's view, factors limiting GMAC's intrinsic credit profile include its significant business and financial concentrations with parent GM. GMAC's direct net exposure to GM at 6/30/05 was approximately $4.8 billion, or 21% of book net worth. GMAC also makes available to GM a $4 billion line of credit. Furthermore, GMAC sources nearly all of its non-mortgage originations through its relationship with GM's dealer and retail base. As a result, GMAC's origination volumes, asset quality, and earnings are sensitive to conditions at GM. GM's Ba2 ratings are under review for possible downgrade, reflecting continuing operating and competitive challenges. In Moody's view, GMAC's business and financial concentrations with GM suggest that a further deterioration in GM's rating could lead to downward pressure on GMAC's stand-alone credit profile, though the two do not necessarily move in unison.

GMAC's stand-alone profile is further constrained by profitability metrics that have historically been weaker than peers and are under pressure due to rising interest rates. If GMAC's origination volumes decline further, operating costs could cut into margins unless the company adjusts the scale of its operations in an effective and timely manner. Moody's also believes GMAC's financial leverage is high, which limits the firm's financial flexibility.

To conclude its review of GMAC's ratings, Moody's will need further information regarding GM's plans, including the identity of the potential partner and detail regarding the governance and business strategy of GMAC under the revised ownership. Additionally, given the aforementioned execution risk related to the transaction, Moody's would need to believe that there is a high degree of certainty the transaction would be completed.

GMAC, a wholly-owned subsidiary of GM, provides retail and wholesale financing in support of GM's automotive operations and is one of the world's largest non-bank financial institutions. It reported earnings of $1.5 billion and assets of $309 billion at 6/30/05.

New York
Robert Young
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Mark L. Wasden
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Moodys.com