DBRS Places GMAC Loans Under Review
As a result of General Motors LLC (GM) bankruptcy filing Monday with the U.S. Bankruptcy Court, DBRS has conducted an analysis of all DBRS-rated outstanding retail auto loan, lease and wholesale ABS transactions originated by GMAC LLC.
NEW YORK — As a result of General Motors LLC (GM)
bankruptcy filing Monday with the U.S. Bankruptcy Court, ratings firm DBRS has conducted an
analysis of all DBRS-rated outstanding retail auto loan, lease and wholesale
ABS transactions originated by GMAC LLC.
DBRS confirmed the ratings for all outstanding retail auto loan and lease ABS transactions which include: Capital Auto Receivables Asset Trust 2004-2, 2005-1, 2006-1, 2006-2, 2007-2 and 2008-1 and Capital Auto Receivables Asset Trust 2007-SN1.
DBRS placed the ratings for Superior Wholesale Inventory Financing Trust XI (SWIFT XI), a wholesale ABS transaction, Under Review with Developing Implications. The ratings action has been taken due to the occurrence of a rapid amortization event triggered by the bankruptcy filing and the impact on the performance of the collateral supporting the SWIFT XI trust caused by the bankruptcy filing.
Certain positive credit factors are present to support the current ratings of the SWIFT XI transaction. These factors include: consistent yield, an increase in GMAC personnel to monitor dealers and a sufficient diversification at the dealer level (currently 993 dealers in the trust).
The business line is a core channel for GMAC and, more importantly, GM. Negative credit factors affecting the rating include: the dependency of the trust on GMAC to generate new receivables; the fluidity and uncertainty surrounding GMAC and GM despite the fact that GMAC has benefitted from key capital and liquidity support from the federal government.
Through the GM bankruptcy process, dealers will be affected by the separation of the company into “Goodco” and Badco” business line designations. It is unknown at this time which dealers within the SWIFT XI trust may be part of the franchises that are included in the “Goodco” and “Badco” franchises.
The dealers which are part of the “Badco” franchises are subject to heightened risk of a decline in performance. Regardless of which business lines are identified as either “Goodco” and Badco”, the market values of all GM-related the vehicles that secure the loans supporting the SWIFT XI trust are in question, which is a risk to the transaction.
DBRS will continue to monitor the status of the bankruptcy filing and its implications on the servicer, the servicers’ operations and the performance of the obligors in the trusts. DBRS expects to resolve the Under Review status as expeditiously as possible and will provide updates as warranted.
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