Moody's rates GMAC preferreds Ba3

Moody's Investors Service said it confirmed GMAC LLC's Ba1 senior unsecured ratings following General Motors Corp.'s announcement that it closed the sale of a 51% stake in GMAC to FIM Holdings, LLC, an investor consortium led by Cerberus FIM Investors, LLC. Moody's also assigned a Ba3 rating to GMAC's $1.9 billion preferred equity securities, which were issued to GMAC's owners in connection with the sale transaction.

The outlook is negative.

The agency said the confirmation incorporates the fact that the transaction delinked GMAC from GM on the basis of a change in control in favor of the Cerberus consortium, the transaction reduces GMAC's direct and indirect exposure to GM and eliminates its potential liability for GM's pension obligations and the agency's view that GMAC's new owners will have a positive influence on GMAC's operating strategy, which will emphasize profitability improvements through gains in operating and funding efficiency, capital strengthening through earnings retention and dividend reinvestment and enhanced liquidity through improved access to the capital markets.

The confirmation also incorporates GMAC's continued business concentration with GM, which, given GM's operating challenges, poses ongoing risks to GMAC's operating metrics and access to confidence sensitive funding, the agency said, adding that GM's call option on GMAC's automotive operations represents an upside ceiling on GMAC's unsecured rating based upon a re-linkage of ratings should GM exercise the option.

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