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.
