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GMAC has Raised $7.1 Billion Selling Securities, Bonds

March 17, 2010
2 min to read


GMAC Financial Services this week is raising nearly $1 billion selling retail auto loans as securities, Automotive News reported.


The sale is one of a series of transactions indicating that GMAC has improved its access to capital in the past six months after having to rely on repeated cash infusions from the U.S. Treasury Department to stay afloat during the credit crisis.

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Treasury owns 56 percent of GMAC after investing $17.2 billion in the company.


When the latest transaction is complete, GMAC will have raised $7.1 billion since September through the sale of securities and bonds.


This week's sale represents the first time that GMAC unit Ally Bank has sold securities outside of a government-sponsored program. Ally Bank's previous three transactions in September, November and February used a federal program designed to free up credit markets by providing financial aid to investors.


Last week, GMAC raised $1.5 billion through a bond issue -- the second this year. And in February, GMAC raised $2 billion through a bond issue, the first time the lender was able to access the capital markets since May 2007.


GMAC CEO Michael Carpenter said the bond issue was a major step toward profitability. Several recent ratings upgrades have lowered GMAC's cost of capital, he explained in an interview after the February transaction.

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Said Carpenter: “Over time, the cost savings is very substantial. …On a more than $150 billion balance sheet, some large percentage is financed by debt. You get to some big numbers quickly.”


Carpenter said GMAC would seek new partnerships with automakers beyond General Motors and Chrysler once its access to capital improves.


GMAC just entered an agreement with Spyker Cars N.V. to provide retail and inventory financing to Saab's global network of 500 dealers. Spyker recently bought Saab Automobile from GM, and the arrangement continues the lending relationships most of the dealers had with GMAC when GM owned Saab.

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