FARMINGTON HILLS, Mich. - Chrysler Financial has completed the renewal of its annual credit facilities, and will receive $24 billion toward funding for the company's dealer and consumer financial services products.
Originally, the company was seeking a renewal of its conduit credit facilities in the amount of $30 billion. Chrysler Financial reduced the amount required due to conditions in the credit markets and changes in the company's retail strategy.
"We are pleased with the completion of our credit facilities renewal and the continuing confidence in our company demonstrated by the banking community," said Tom Gilman, executive vice chairman of Chrysler Financial. "Ninety percent of all banks that were part of the original conduit participated in the renewal. The liquidity provided by these facilities will enable us to support our dealers and their retail customers."
"I would like to thank our investors who have continued to support us through the renewal. And, I would like to acknowledge the skilled leadership of Citi, JPMorgan and the Royal Bank of Scotland who led the syndication of the loan facilities and partnered with us to manage such a large transaction," added Gilman.
Chrysler Financial will use the credit facility as a source of funding to make loans to Chrysler dealers financing inventories of unsold vehicles in showrooms and to make loans to consumers financing vehicle purchases. Those loans are then typically bundled up and sold to investors in the asset-backed securities market.
In July, Chrysler, which is majority-owned by private equity firm Cerberus Capital Management, said the financing arm would stop offering vehicle leases. Chrysler did not specify the interest rate it was paying on the financing.
But the Wall Street Journal reported that the company would pay interest rates of 1.1 percentage points to 2.25 percentage points over Libor on different parts of the funding, compared to 0.3 percentage point to 0.5 percentage point over Libor on the facilities raised a year ago.
Chrysler Chief Financial Officer Ron Kolka said on Friday the financing cost would be higher because of the tighter credit markets.
Chrysler Financial spokesman Bill Porter said $24 billion raised in the refinancing was sufficient because of the company's decision to abandon lease financing.