The struggling GMAC Financial Services sold $2.9 billion in government-backed debt late on Oct. 28, ahead of a regulatory deadline in November that will test the mortgage/auto lender's capital levels and ability to absorb losses.
The bonds are senior fixed rate notes guaranteed by the Federal Deposit Insurance Corp. under its Temporary Liquidity Guarantee Program.
Thanks to the government guarantee, the notes will be rated AAA by all three major rating agencies. GMAC is a bank holding company that controls Residential Capital Corp., the nation's fifth largest residential lender and servicer.
The government has invested $12.5 billion in the company to date and owns 35% of it.
Concerns that GMAC could fail the impending capital test had sent the cost of insuring debt at its residential mortgage arm, Residential Capital, spiraling in the past week as investors worried that the unit would need to be spun off.
