GMAC and Residential Capital (ResCap) took ratings cuts today that brought their ratings deeper into junk territory, as Standard & Poors and Fitch Ratings both took actions against the specialty finance entities.
Fitch Ratings cut its issuer default rating on GMAC to B+ from BB- on concerns that it might have to borrow against its assets to enhance its liquidity position. ResCaps rating was cut to C from BB-, after the company announced that it would exchange $12.8 billion in current debt for new debt secured by assets.
Citing similar concerns about ResCaps planned debt restructuring, Standard & Poors said it would lower ResCaps long-term corporate credit rating to 'CC' from 'CCC+.'
A successful exchange would extend debt maturities, providing needed relief, but the action illustrates the gravity of the company's financial position, S&P said.