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Fitch downgrades GMAC
Fitch Ratings said it downgraded the long-term issuer default rating of GMAC LLC and related subsidiaries to BB- from BB, along with its unsecured long-term ratings to B+ from BB-, reflecting the potential for reduced recovery in a default scenario should the company encumber assets. The subsidiaries downgraded include GMAC International Finance BV, GMAC Bank GmbH, GMAC Canada Ltd., General Motors Acceptance Corp. of Canada Ltd. and General Motors Acceptance Corp. of Australia. General Motors Acceptance Corp. (New Zealand) Ltd.'s long-term issuer default rating was cut to BB- from BB.
Fitch also said it affirmed the B short-term ratings for GMAC and all subsidiaries.
The outlook remains negative.
The downgrade reflects in part continued financial deterioration at Residential Capital LLC, which has necessitated further financial support from GMAC as part of a debt exchange at Residential Capital, Fitch said.
In addition, given the current capital markets environment, Fitch said it believes that GMAC may need to encumber assets to enhance its liquidity. To the extent this occurs, it would subordinate current debtholders and reduce recovery prospects in a default scenario, the agency said.
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