Moody's upgrades GMAC

Moody's Investors Service said it upgraded the senior unsecured rating of GMAC LLC to Ca from C and placed GMAC's C senior unsecured and preferred stock ratings on review for further upgrade.

The ratings of Residential Capital LLC (senior rating at C) were not affected by this action.

Moody's said the upgrade of GMAC's rating reflects the firm's lower bankruptcy risk resulting from the U.S. government's support of the firm.

Concerns include the need to raise substantial additional equity to comply with the requirements of the recently concluded stress tests under the U.S. government's supervisory capital assessment program, according to the agency.

"Capital inflows, partial government ownership, and GMAC's importance to reviving GM and Chrysler point to a lower probability of near-term default," Moody's senior analyst Mark Wasden said in a statement. "However, the challenges GMAC faces in executing its business strategy and the resultant uncertainties for bondholders remain a constraint on GMAC's credit."

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