Printer Friendly

GMAC COMMERCIAL PAPER AFFIRMED; GM, GMAC SENIOR DEBT ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --

GMAC COMMERCIAL PAPER AFFIRMED; GM, GMAC SENIOR DEBT ON FITCHALERT
 NEGATIVE -- FITCH FINANCIAL WIRE --
 NEW YORK, Nov. 4 /PRNewswire/ -- General Motors Corp.'s 'A+' senior debt and General Motors Acceptance Corp.'s 'A+' senior debt and Euro- medium-term note are placed on FitchAlert with negative implications. This action also applies to GM's 'A+' pass-through certificates and GM's 'A' rated preferred and preference stock. The credit trend remains declining.
 GMAC's outstanding $17 billion 'F-1' commercial paper is affirmed, including domestic and Euro commercial paper, GMAC demand notes, and programs of General Motors Acceptance Corp. (U.K.) Plc, and General Motors Acceptance Corp. Nederland N.V. Also affirmed are all of GMAC's 'AAA' asset-backed securities rated by Fitch.
 The FitchAlert applies to the following GM securities: $5.2 billion senior debt, $500 million pass-through certificates, $300 million preferred stock, and $3.8 billion preference stock. The action also applies $42 billion GMAC senior debt.
 In the face of poor North American auto market performance, weakening car market shares, and continuing losses, GM is making even more urgent efforts to restore the enterprise to profitability and to stabilize its balance sheet. Ongoing strains in its North American automotive business continue to override the positive contributions from its other major profit centers: international automotive, GMAC, Hughes and EDS. As feared, the company has encountered strong resistance from employees and suppliers in reducing costs and capacity. Although GM has been able to raise substantial funds in the capital markets to date, its net cash outflows have continued at an average quarterly rate of approximately $1 billion so far in 1992.
 While recent realignments and senior management changes address the issues of organizational flexibility and simplicity, and the common share dividend halving conserves cash, major challenges remain. GM must find ways to replicate product success in North America, so as to restore profitability and generate the cash flow to support ongoing operations. Unless the corporation is able to come to a more harmonious relationship with workers and suppliers, savings from its cost reduction actions could be delayed or reduced. Finally, weak economic conditions in the US could continue for a while, further obscuring the benefits of these efforts. It is also uncertain whether North American profitability can ultimately be restored to former levels, given the keen competition in that market.
 For the eighth year in a row, GMAC will earn in excess of $1 billion. Consistent asset quality, strong margins, and successful marketing programs have given the company a stable foundation of earnings which has been supplemented with some expansion outside of the automotive finance business. GM-related concerns have had a negative impact on the company's funding position. However, the commercial paper rating is affirmed at 'F-1' to reflect the company's strong liquidity. As of Sept. 30, it has almost $9 billion of cash, has reduced commercial paper outstandings to $17 billion, (net CP outstanding is 100 percent covered by committed backup facilities), and can continue to securitize assets to provide funding. Based on pure fundamentals, GMAC is one of the largest and best performing financial institutions in the country and has been a strong contributor to GM results. Over the longer term, however, its performance will track that of the parent. While leverage has also been reduced significantly, to 8.9 times at Sept. 30, there are no limitations on capital flows to the parent company.
 -0- 11/4/92
 /CONTACT: Mary Anne Sudol, CFA, 212-908-0562 (GM), or Nancy E. Stroker, CFA, 212-908-0533 (GMAC), both of Fitch/
 (GM) CO: General Motors Corp.; General Motors Acceptance Corp. ST: Michigan IN: AUT SU: RTG


SH -- NY020 -- 2377 11/04/92 10:11 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 4, 1992
Words:606
Previous Article:IVAX COMPLETES ACQUISITION OF CERTAIN ASSETS OF THE U.K. GENERIC PHARMACEUTICAL OPERATIONS OF MEDEVA PLC
Next Article:LELAND O'BRIEN RUBENSTEIN (LOR) TO LIST FIRST OPEN-ENDED UNIT INVESTMENT TRUST, SUPERUNITS, ON THE AMEX
Topics:


Related Articles
GM AND GMAC RATINGS PLACED ON FITCH ALERT NEGATIVE -- FITCH FINANCIAL WIRE --
GENERAL MOTORS $1.0 BILLION 9.125 PERCENT PREFERENCE STOCK RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --
GMAC $250 MILLION. 9.625 PERCENT NOTES RATED 'AA-', ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
GM, GMAC RATINGS AFFIRMED BY FITCH AFTER GMHE ANNOUNCEMENT -- FITCH FINANCIAL WIRE --
GM $1 BILLION PREFERENCE STOCK RATED 'A'; ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
GM, GMAC $48 BILLION SENIOR DEBT LOWERED TO 'A-' BY FITCH
CHRYSLER CORP., CFC AFFIRMED; REMOVED FROM FITCHALERT NEG -- FITCH FINANCIAL WIRE --
DCR REAFFIRMS 'A-' SENIOR DEBT RATINGS OF GM AND GMAC
GM, GMAC 'A-' SENIOR DEBT, 'F-1' CP RATINGS AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --
GM, GMAC 'A-' SENIOR DEBT RATINGS AFFIRMED BY FITCH - FITCH FINANCIAL WIRE -

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters