Moody's: GMAC, ResCap unaffected

Moody's Investors Service said Residential Capital LLC's announcement that it has received a $1.2 billion capital injection from its parent, GMAC LLC, does not impact the ratings of either entity. The capital injection is equal to the face amount of ResCap debt purchased in the open market by GMAC with an estimated current market value of $607 million and exchanged for $607 million newly created ResCap preferred units. GMAC also disclosed that it has purchased an additional $340 million face value of ResCap debt currently valued at $266 million that it may contribute to ResCap.

The agency said the downgrade of GMAC's senior unsecured rating on Feb. 5 to B1 with a negative outlook contemplated that the company would likely continue to provide capital to support ResCap in the near term.

In regards to ResCap, the downgrade to B2 on Feb. 5 of its senior unsecured rating with a negative outlook incorporated the possibility that the company would receive sizable support from its parent, the agency said. Moody's still believes that ResCap's parents may have a limited tolerance for supporting ResCap if ResCap's performance and condition fail to meet management's expectations for improvement during the first half of 2008. Additionally, the agency noted that the form of the capital injection does not improve ResCap's short-term liquidity profile.

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