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Rating Action:

Moody's upgrades GMAC auto lease securitizations

14 Jan 2010

Approximately $3.4 billion of asset backed securities affected

New York, January 14, 2010 -- Moody's Investors Service has upgraded the ratings of thirteen classes of notes issued from nine auto lease securitizations sponsored by GMAC Inc. ("GMAC"). The rating actions reflect the continued improvement in performance, particularly with recoveries on residual value from terminated leases. Furthermore, the ratings account for the emergence from bankruptcy of General Motors Company ("New GM"), the manufacturer of the underlying vehicles, and reduced uncertainty surrounding the future of GMAC, the servicer of the transactions; both lowering the potential for volatility of future performance.

Weaker than expected residual value realization had motivated the previous downgrades of these transactions. The concerns centered around (1) the affect of a prolonged contentious GM bankruptcy on the recoveries of the vehicles backing the underlying lease pool and (2) the ability of GMAC, given its linkage to GM as its captive finance arm, to effectively remarket the leases without any meaningful disruption. The lack of historical precedents for a bankruptcy of such size in the industry added to the uncertainty. Positive residual value realization trends have enabled the affected securities to build substantial credit enhancement. At the same time, the financial and operational restructuring of GM and GMAC have alleviated immediate concerns about the operational risk of these entities and its impact on the performance of the transactions, though both firms continue to face longer-term operating challenges.

General Motors Corporation ("Old GM") filed Chapter 11 bankruptcy on June 11, 2009. Moody's, however, did not observe any material adverse impact of the Old GM bankruptcy on residual values. Residual values experienced unprecedented volatility at various points during the last fifteen months due to the broader macroeconomic environment and the deteriorating financial condition of the auto industry. They stabilized for GM as well as the industry during first half of 2009 and improved further into the second half of the year. The swift and successful emergence of New GM from bankruptcy on July 10 through support from the U.S. government seems to have mitigated downward pressure on GM residual values. Other factors that could have contributed to the improving trends include increased consumer demand for used vehicles as a cheaper alternative to buying a new vehicle.

Uncertainties relating to the role of GMAC as the servicer, particularly its ability to remarket a sizeable number of off-lease vehicles in a short period of time, were mitigated by the U.S. government's support and increasing stake in the company that have improved its liquidity and capital positions. The agreement with Chrysler LLC to provide financing to Chrysler dealers and customers further strengthened GMAC's competitive position in the market.

The senior securities that were upgraded to Aaa are expected to withstand residual value loss per vehicle of approximately 50% or higher during the peak period of lease maturities. This level is roughly twice the average peak residual value loss levels experienced by the sector during the second half of 2008, when losses were at their highest. Residual value losses on turned-in vehicles fluctuated from low-to-mid single digits from the second quarter of 2008 to mid 20% range during the last quarter. The senior securities that were upgraded to Aa are expected to withstand residual value loss per vehicle of approximately 40% to 50% during the peak period of lease maturities. Moody's also took the distribution of lease maturities into consideration in deriving the final ratings. The transactions where leases are expected to mature in the near term are more likely to benefit from the current rebound in the vehicle market. Conversely, transactions where lease maturities are further out into 2011 are subject to greater uncertainty.

The principal methodology used in rating the transaction is "Auto Lease Securitization: Moody's Rating Approach," November 1998, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. The rating actions are based on the credit enhancement available relative to the probability-based loss expectation. Other methodologies and factors that may have been considered in the process of rating these transactions can also be found in the Rating Methodologies sub-directory on Moody's website.

In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

The complete rating actions are as follows:

Issuer: Capital Auto Receivables Asset Trust 2007-SN2

Cl. A-3, Upgraded to Aaa; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Cl. A-4, Upgraded to Aaa; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Cl. B, Upgraded to Aa2; previously on 7/30/2009, Baa3 Placed on Review for Possible Upgrade

Cl. C, Upgraded to A2; previously on 7/30/2009, Ba3 Placed on Review for Possible Upgrade

Cl. D, Upgraded to Baa2; previously on 7/30/2009, B3 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2007-SNE

Cl. A, Upgraded to Aa1; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2007-SNG

Cl. A, Upgraded to Aa2; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2008-SNA

Cl. A, Upgraded to Aa2; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2008-SNB

Cl. A, Upgraded to Aa2; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2008-SND

Cl. A, Upgraded to Aa2; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2008-SNE

Cl. A, Upgraded to Aa3; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2008-SNF

Cl. A, Upgraded to Aa3; previously on 7/30/2009, Baa1 Placed on Review for Possible Upgrade

Issuer: Capital Auto Receivables Asset Trust 2008-SNH

Cl. A, Upgraded to Aaa; previously on 7/30/2009, A2 Placed on Review for Possible Upgrade

SERVICER

GMAC provides wholesale, retail, and lease financing, primarily to General Motors Company and Chrysler dealers and is one of the world's largest auto finance companies. GMAC's senior unsecured rating was upgraded from C to Ca on June 10, 2009. The rating remains under review for further possible upgrade. The upgrade and the review reflect the firm's lower bankruptcy risk resulting from the U.S. government's support of the firm, including significant capital injections that have improved its liquidity and capital positions; U.S. government ownership of approximately 56% of common equity; and GMAC's role in the U.S. government's efforts to reinvigorate the U.S. domestic auto industry. General Motors Company ("New GM"), headquartered in Detroit, Michigan, is one the world's largest auto manufacturers.

New York
Luisa De Gaetano
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Sanjay Wahi
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's upgrades GMAC auto lease securitizations
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