| Autos get back in gear |
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In July, GMAC returned to the unsecured market for the first time since having been downgraded to junk by Standard & Poor's and Fitch Ratings in May. There was no shortage of takers for its €500 million two-year fixed-rate issue led by Lehman Brothers and Citigroup – a €2 billion order book was built in little over an hour, proving that the auto financier is not purely reliant on the secured markets for funds. In May after the downgrade, GMAC had sold a $3 billion auto loan asset-backed securitization deal and in June it issued a $1 billion dealer floorplan securitization just a few days after Ford Motor Credit printed a $2.4 billion floorplan. The fact is that despite the gloomy headlines, sophisticated investors are comfortable with the risk profile of the auto makers and consider it to be acceptable in the short term. Further proof was given when Ford's FCE Bank followed GMAC with a €1 billion two-year issue.
GMAC's deal was fascinating, as its issue attracted investment-grade rather than high-yield investors.