In a 45-page report on General Motors and General Motors Acceptance Corp., a team of Merrill Lynch analysts from the unsecured debt and ABS groups highlighted the benefits and drawbacks of GMAC's increased reliance on securitization as its corporate rating heads south. GMAC has already started to change its funding strategy to rely more on secured financing and is likely to be forced to turn to the securitization markets even more if its corporate debt falls below investment-grade status.

Merrill expects to see both GM and GMAC downgraded below investment grade by either Standard & Poor's or Fitch Ratings - and possibly even both - in the next three to six months, noting that its corporate bonds are already trading wide of single-B levels, making further unsecured debt issuance by GMAC prohibitively expensive.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.