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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 13, 2005
(Date of report; date of
earliest event reported)
Commission file number: 1-3754
GENERAL MOTORS ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-0572512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Renaissance Center
P.O. Box 200 Detroit, Michigan
48265-2000
(Address of principal executive offices)
(Zip Code)
(313) 556-5000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 8.01 Other Events
On February 13, 2005, Standard & Poor's Ratings Services (S&P) affirmed the
ratings of General Motors Corporation (GM) and General Motors Acceptance
Corporation (GMAC). Their press release follows.
On February 14, 2005, Fitch Ratings (Fitch) confirmed the ratings of GM and
GMAC. Their press release follows.
On February 14, 2005, Moody's Investors Services, Inc. (Moody's) confirmed the
ratings of GM and GMAC, but changed the outlook of both companies to negative
from stable. Their press release follows.
On February 14, 2005, Dominion Bond Rating Service (DBRS) confirmed the ratings
of GMAC and related subsidiaries. Their press release follows.
Research Update: General Motors, GMAC Ratings Affirmed On Fiat Deal Termination
Publication date: 13-Feb-2005
Primary Credit Analyst(s): Scott Sprinzen, New York (1) 212-438-7812;
scott_sprinzen@standardandpoors.com
Credit Rating: BBB-/Stable/A-3
Rationale
Standard & Poor's Ratings Services today affirmed its ratings on General Motors
Corp. (GM; BBB-/Stable/A-3), General Motors Acceptance Corp. (GMAC; BBB-/Stable/
A-3), and all related entities. The rating outlooks remain stable. Consolidated
debt outstanding totaled $301 billion at Dec. 31, 2004.
The affirmation follows the announcement by GM and Fiat SpA (Fiat;
BB-/Negative/B) of a settlement agreement under which GM will pay Fiat
(euro)1.55 billion and transfer to Fiat its 10% ownership stake in Fiat Auto
Holdings B.V. (Fiat Auto), in conjunction with the termination of the Master
Agreement between GM and Fiat and the transfer to GM by Fiat Auto of certain
assets (see Standard & Poor's media release: "BULLETIN: Fiat's Agreement With GM
A Neutral Development" published today). We believe GM has ample cash on hand,
given its liquidity position of $23.3 billion at year-end 2004, excluding GMAC,
to accommodate the (euro)1.55 billion payment. Termination of the Master
Agreement and related measures should not add to the considerable operating
challenges GM faces in turning around its problem-plagued European operations.
Moreover, this agreement will eliminate the considerable uncertainty that had
stemmed from the option provided for under the Master Agreement for Fiat to put
its remaining stake in Fiat Auto to GM.
The rating on GM reflects the benefits of its extensive sales finance business,
which is conducted through GMAC, of GMAC's highly profitable mortgage business,
and of substantial liquidity at both GM and GMAC. However, the rating also
reflects the clouded prospects of GM's automotive operations, given increasingly
competitive industry conditions in all of the company's core markets. Moreover,
GM is burdened with a very large unfunded retiree medical liability, and
Standard & Poor's sees little likelihood that this liability will be reduced
during the next few years, either through concessions granted by labor or
through government assistance.
GM's consolidated net income in 2004 totaled a satisfactory $3.6 billion ($6.40
per share) before special items. Management has recently indicated that net
income in 2005 is expected to total only $2.3 billion - $2.8 billion ($4.00 to
$5.00 per share) before special items. The guidance for 2005 is broadly
consistent with the near-term assumptions we made when we lowered GM's ratings
on Oct. 14, 2004 (from BBB/Negative/A-2). The guidance suggests that GM will be
only about breakeven in its automotive operations (after the allocation of
legacy costs classified as "Corporate Other"), with GMAC contributing virtually
all consolidated earnings. However, we believe there is the risk that the
expected 2005 earnings level will not be achieved, particularly given
management's indication that earnings in the current quarter will be only about
breakeven, and then improve in the balance of the year--defying the normal
seasonal pattern. Moreover, we believe it could be difficult for GM to improve
earnings beyond 2005.
GM continues to struggle in its two most important markets, North America and
Europe. Despite robust industry sales and past success in cutting costs and
improving the quality of its products, GM earned a relatively weak $1.2 billion
after-tax in North America in 2004, before substantial impairment charges. GM
has continued to lose market share in North America, even with aggressive
discounting and higher sales to daily rental fleets. GM's earnings have been
pressured by soaring health care costs: U.S. postretirement health care expense
will increase by approximately $1 billion in 2005 from 2004 levels. Management
is expecting offsetting cost-cutting actions to contain the extent of erosion in
North American profitability this year--with net income decreasing to $500
million--but we believe this objective could be jeopardized with any material
decline in industry volume, further market share erosion by GM, or intensified
price pressures.
Between new products introduced in late 2004 and those to be launched in 2005,
GM will have updated about 25% of its sales volume; however, the earnings
benefit will be limited, given the low-margin nature of most of these new
products. Its all-important large/luxury sport utility vehicles (SUVs) and
full-size pickups, which account for the bulk of its automotive earnings, will
not be renewed until 2006 and 2007. Ford Motor Co. will also be renewing its
major SUV products during 2006 and 2007, while Toyota Motor Corp. will be
introducing a new full-size pickup during this period, for which it is
constructing expanded production capacity. Moreover, we are concerned about
recent signs of the maturing of demand for large/luxury SUVs.
GM has been unprofitable in Europe since 1999, notwithstanding extensive
restructuring actions. Accelerating losses during 2004 necessitated development
of yet another turnaround plan, encompassing a 20% reduction of its European
workforce and renewed efforts to enhance revenues. For 2005, management is
anticipating a small reduction in net losses, to $500 million (before special
items), down from $742 million in 2004. Taking account of the large
restructuring charges we believe will stem from restructuring actions in Europe,
GM's global automotive operations will be in a substantial loss position in
2005.
Although GM had until recently been highly profitable in China, it is now
suffering from a rapid, industrywide slowdown in demand growth. This decline
could prove temporary, but it underscores the volatility of that market, where
virtually all the world's automakers are investing heavily to expand their
presence. GM's targeted net earnings in the Asia-Pacific region of $600 million
in 2005 (compared with $729 million in 2004) is partly predicated on a strong
rebound in market demand in China during the second half of 2005.
The robust and relatively stable earnings contribution of GMAC is a critical
factor supporting GM's current rating. In its automotive finance operations,
GMAC has benefited in recent years from low credit losses and improving lease
residual realizations. Although GMAC's unsecured borrowing spreads have widened,
the company has benefited from low general interest rates and its access to
low-cost asset-backed securitization (ABS) financing, taking advantage of its
excellent asset quality. In the near term, expected rising interest rates will
put pressure on GMAC's profit margin, but the effect will be muted by
management's previous actions to lessen use of floating-rate debt.
GMAC's mortgage unit has been able to sustain impressive profitability, even
with the decline in residential mortgage industry volume, benefiting from
growing market share in the residential sector, a countercyclical increase in
mortgage-servicing income, increased fee-based business, and expansion in
overseas markets. Management has stated that GMAC's overall net income in 2005
should total at least $2.5 billion, compared with a record $2.9 billion in 2004,
and we view this as a realistic objective.
Management is also expecting automotive cash flow (after capital expenditures,
before pension and VEBA contributions, and dividends received from GMAC) to
deteriorate--to $2 billion in 2005 (before cash costs relating to restructuring
actions in Europe), from $4.2 billion for 2004--partly as a result of higher
planned capital spending. GMAC is expected to pay a dividend of $2 billion to
the parent, up from $1.5 billion in 2004. Owing to favorable investment
portfolio returns, we estimate that GM was able to reduce its worldwide unfunded
pension level to a relatively small amount at year-end 2004, compared with an
$8.6 billion deficit at year-end 2003, even with the adverse measurement effect
of a downward revision of the discount rate. (These net liability figures do not
include $13.5 billion of debt issued in 2003 to finance pension contributions.)
However, even with $9 billion of VEBA contributions, favorable investment
portfolio returns, and the estimated $4 billion benefit of the new Medicare
prescription drug program, its U.S. unfunded retiree medical liability ($53.8
billion at year-end 2004) barely declined from the massive level ($54.5 billion)
at year-end 2003 due to the effect on the liability of an upward revision of the
assumed near-term health care cost trend rate, in light of recent adverse
experience and a downward revision of the discount rate. Management has
indicated that GM is unlikely to make additional pension fund or VEBA
contributions for the next few years. We assume that the bulk of any surplus
cash that materializes will be used to reduce other liabilities or to add to
cash reserves.
Short-term credit factors.
GM's short-term rating is 'A-3', the same as GMAC's. GM's fundamental challenges
are short and long term in nature. However, GM's liquidity and financial
flexibility minimize any potential for near-term financial stress.
We believe GM will generate free cash flow (before pension and VEBA
contributions, and dividends from GMAC, but taking account of working capital
changes and capital expenditures) in 2005. Notwithstanding the high operating
leverage--and the resulting volatility--experienced by automakers, we believe GM
is highly unlikely to experience negative cash flow during the next year, even
if industry conditions become significantly more difficult than expected.
Moreover, GMAC should be able to continue paying substantial dividends to the
parent without its financial leverage suffering appreciably.
Key aspects of GM's financial flexibility and liquidity are as follows:
-- A large liquidity position--Cash, marketable securities, and short-term
VEBA funds totaled $23.3 billion at Dec. 31, 2004 (excluding GMAC);
-- Moderate near-term, parent-level debt maturities--Long-term debt has an
exceptionally high average maturity;
-- In the wake of recent funding actions, GM faces neither ERISA-mandated
pension fund contributions through this decade nor the need to make
contributions to avoid Pension Benefit Guaranty Corp. variable-rate premiums;
and
-- As of Sept. 30, 2004, GM had unrestricted access to a $5.6 billion
committed bank credit facility expiring in June 2008, $800 million in committed
credit facilities with various maturities, and uncommitted lines of credit of
$1.7 billion.
GMAC has substantial ongoing funding needs. As of Sept. 30, 2004, short-term
debt (including current maturities of long-term debt) was $87.6 billion, not
including maturing off-balance-sheet securitizations. Reflecting the close
linkage between GMAC and GM, GMAC's funding flexibility has suffered in recent
years from the problems affecting GM's automotive operations. Thus, GMAC's
unsecured bond spreads have been volatile, calling into question the extent to
which GMAC can rely on consistent future access to the public unsecured debt
market.
However, GMAC has responded by taking the following actions:
-- Accumulating a large cash position ($24.4 billion at Sept. 30, 2004);
-- Expanding its relatively less-credit-sensitive retail debt issuance
programs, such as its SmartNotes program;
-- Diversifying its securitized
funding channels, including expanding its bank conduit ABS and, recently,
completing a securitization of lease assets;
-- Entering the nascent whole-loan market and establishing committed,
whole-loan sale flow agreements; and
-- Commencing operations of GMAC Automotive Bank, a Utah-charted ILC.
At Sept. 30, 2004, GMAC had a $4.6 billion syndicated line of credit committed
through June 2005, $4.4 billion committed through June 2008, $4.6 billion of
bilateral committed lines with various maturities, and $21.3 billion in
uncommitted lines of credit. In addition, New Center Asset Trust (NCAT) had
$19.5 billion of liquidity facilities committed through June 2005. Mortgage
Interest Networking Trust (MINT) had $3.4 billion of liquidity facilities
committed through April 2005. NCAT and MINT are qualified special-purpose
entities administered by GMAC for purchasing assets as part of GMAC's
securitization and mortgage warehouse funding programs. These entities fund the
purchase of assets through the issuance of asset-backed commercial paper. GMAC
also had $54.8 billion in funding commitments (of which $25.6 billion was
unused) with third parties, including third-party asset-backed commercial paper
conduits, that may be used as additional secured funding sources.
A leverage covenant in the bank credit facilities restricts the ratio of
consolidated debt to total stockholders' equity to no more than 11.0 to 1
(excluding on-balance-sheet securitized debt from the definition of consolidated
debt). Per this definition, the debt-to-equity ratio was 8.0 to 1 at Sept. 30,
2004. This covenant would be problematic only if, contrary to our expectations,
GMAC's access to the ABS market were disrupted. (GM and GMAC have no financial
covenants or other credit triggers in financing arrangements that we view as
potentially problematic.)
GMAC's automotive asset composition is highly liquid, given that about half of
its total gross receivables is due within one year and that a substantial
portion of receivables is typically repaid before contractual maturity dates.
However, GMAC is constrained in its ability to reduce the size of its automotive
portfolio, given its need to support GM's marketing efforts. Given the
liquidation of loans originated in recent years, GMAC's automotive asset levels
are unlikely to increase substantially in the next one to two years, even if
price competition in the auto sector remains intense as expected. As part of its
funding diversification strategy, GMAC is pursuing opportunities to fund part of
its commercial mortgage operations externally. In addition, we believe that if
GM were to experience liquidity pressures, it could monetize GMAC's mortgage
operations.
GMAC has disclosed that it is considering a restructuring of its residential
mortgage operations, involving placement of its two existing residential
mortgage subsidiaries within a newly formed holding company. If this
restructuring enables the existing, substantial intercompany advances extended
by GMAC to the mortgage units to be refinanced externally, we believe it would
represent a modest positive development for GM and GMAC because it would enhance
funding flexibility. (Note: Given the establishment of separate funding channels
and satisfactory corporate governance protections, and if our assessment of the
separate business position and financial condition of the newly formed entity
warranted this, we could rate this entity a notch or two higher than GM/GMAC, in
keeping with our long-standing approach to rating non-captive finance
subsidiaries of industrial parents. We believe such an approach would be
appropriate under the assumption that, if the parent experienced financial
distress, it would most likely divest a non-captive finance business rather than
take actions that would harm the subsidiary's credit quality. Even so, the risks
stemming from ownership affiliation could never be dismissed entirely. However,
GMAC, given its predominantly captive role, will continue to be rated the same
as GM. We regard GMAC and GM as a single economic entity, with effectively the
same default risk, given their strategic importance to each other, GM's ability
to influence GMAC's actions, and the ultimate risk that, in the unlikely event
GM were to file for bankruptcy, this would precipitate a bankruptcy filing by
GMAC.)
Outlook
Although the outlook remains stable, our concerns regarding GM's ability to
improve its competitiveness over a longer period have grown incrementally since
the downgrade in October 2004. In coming months, we will further assess our
views regarding GM's long-range prospects, focusing on the appropriateness of
the stable rating outlook. We currently expect to complete this process by
midyear. Of course, in keeping with our policy of continual surveillance, this
would not rule out a more immediate review if developments warranted such
action.
Fitch: No Ratings Changes For GM Following Fiat Settlement
14 Feb 2005 10:20 AM (EST)
Fitch Ratings-New York-February 14, 2005: The settlement reached between GM and
Fiat is in line with expectations previously incorporated into the ratings of GM
and GMAC, and therefore will have no effect, according to Fitch Ratings. The
ratings remain at 'BBB' with a Negative Rating Outlook, which has been in effect
since October 2004 following a rating downgrade by Fitch.
The settlement marginally weakens a GM balance sheet that has deteriorated over
the past several years but also removes a large uncertainty regarding the
ability of Fiat to exercise the put of its auto operations to GM. Future rating
actions will continue to focus on the capacity of GM to improve profitability in
its global auto operations through competitive product offerings and a
significant reduction in its cost base during a period of unrelenting
competition.
The ratings and Outlook are based on numerous challenges to GM's operating and
financial profile over the near term, including a deteriorating product mix that
is coming under increasing competitive pressure, a car portfolio that remains
weak, a long string of losses in Europe that will be difficult to reverse in the
near term, a high and relatively inflexible fixed-cost structure, and
significant post-employment benefit obligations. GM faces a difficult
environment through 2005 as weak pricing, higher commodity costs, and rising
health care costs combine with a trough in GM's product cycle. Profitability
remains concentrated in large SUV and pickup segments that will be subject to
increasing competition from transplants, while GM's key product rollout, the 900
series, will not be introduced until 2006 and 2007. In addition, recent sales
trends could indicate that the market is transitioning away from the larger SUV
segments that represent heavy GM volumes. In light of these challenges, it will
be critical for GM to show continued progress in attacking its cost base.
Of particular concern is the continuing pace of escalation in health care costs,
which disproportionately disadvantages GM due to its legacy liabilities and
represents perhaps the most significant cost headwind. GM faces a major
challenge in introducing further structural reform to its health care
liabilities, as changes are increasingly likely to be sought from organized
labor. Fitch expects that this will be the major topic in 2007 labor contracts,
although the escalation in health care costs and GM's operating profile indicate
that GM may be forced to explore this issue with the union prior to 2007.
However, GM has become much more aggressive in prefunding its health care
liabilities through VEBA accounts, which have now reached $20 billion. Earnings
on this portfolio are expected to offset a portion of the health care cost
escalation being incurred by GM. Together with GM's pension assets that Fitch
estimates at approximately $90 billion, assumed portfolio returns constitute a
significant part of operating results. GM's recent announcements concerning 2005
expectations and its health care costs in particular, accentuate the
difficulties facing the company but do not represent a significant deterioration
from trends incorporated into the 2004 downgrade. The retention of a Negative
Outlook indicates that the rating could be reviewed for further action at any
time that Fitch views it as warranted.
GM's balance sheet has lost substantial flexibility over the past several years,
primarily resulting from the decision to boost funding of its pension assets.
Total debt has increased substantially over the past several years, although
liquidity remains adequate to maintain required capital investment programs. In
addition, other GM assets, most notably Hughes and Direct TV, were monetized to
boost pension contributions, reducing asset protection. Although benefits paid
to retirees from GM's pension assets remain high, significant contributions over
the past several years have reduced the likelihood of further required funding
over the near term. Over the longer term, GM remains exposed to equity market
underperformance in its pension assets as benefit payments from these assets
will remain significant.
14 FEB 2005
Rating Action: General Motors Corporation
MOODY'S CONFIRMS Baa2 RATING OF GM AND Baa1/P-2 RATINGS OF GMAC; OUTLOOK CHANGED
TO NEGATIVE FROM STABLE.
Approximately $150 Billion of Debt Affected.
New York, February 14, 2005 -- Moody's Investors Service confirmed the Baa2
long-term rating of General Motors Corporation (GM) and the Baa1 long-term and
Prime-2 short-term ratings of General Motors Acceptance Corporation (GMAC), but
changed the outlook of both companies to negative from stable. The change in
outlook follows the announcement that GM has agreed to pay Fiat S.p.A.
(euro)1.55 billion to terminate the Master Agreement between the companies and
to realign their industrial relationships. Although the (euro)1.55 billion
payment does not represent a significant erosion in GM's automotive liquidity
position of $23 billion, this outflow comes as the company is facing increasing
challenges in its competitive and operating environment. These challenges
include the continued erosion in its North American market share position (26.2%
for January 2005), still-high domestic inventory levels, elevated shipments to
the daily rental segment, US incentive levels that remain elevated, and more
negative prospects for the company's burdensome health care costs. The negative
outlook reflects Moody's view that this more stressful environment, in
combination with the (euro)1.55 billion Fiat transaction, will result in credit
metrics that remain weak for the Baa2 level through 2006. In its ongoing
assessment of GM's rating and outlook, Moody's will focus on the company's
ability to remain on track for delivering more appropriate debt protection
measures by 2007 as a result of various new product and cost cutting
initiatives. In order to more solidly support the Baa2 rating, GM's credit
metrics should approximate the following by 2007: EBITA margin should exceed 4%;
fixed charge coverage should be in the 4.0 to 4.5 times range; retained cash
flow to net total debt should exceed 50%; and free cash flow to total debt
should be greater than 15%. For 2004, GM's metrics approximated the following:
EBITA margin of less than 1%; fixed charge coverage below 2 times; retained cash
flow to net debt moderately in excess of 35%; and, free cash flow to total debt
of about 10%.
GM is undertaking a number of initiatives that could enable it to strengthen its
performance from the weak levels that will be generated during 2005. These
initiatives include: 1) a much more robust new product cadence in the US during
late 2005 and continuing through 2007; 2) the continuation of a healthy new
product cadence in Europe during 2005; and, 3) the achievement of approximately
(euro)500 million in annual cost savings due to the elimination of up to 12,000
employees as part of its Europe restructuring. During the next twelve months
Moody's expects to track GM's progress in implementing these initiatives and in
laying the groundwork for stronger performance during 2007. Moody's near-term
assessment of GM's prospects for sufficiently strengthening its 2007 performance
will consider the company's ability to: 1) maintain US market share above 27%
without relying on increased incentive levels; 2) demonstrate solid customer
acceptance of the products launched during late 2005 in both the US and Europe;
3) reduce US inventory levels; 4) wean itself from a relatively high dependence
on the US daily rental market; and 5) effectively restructure and strengthen its
European operations as it unwinds the three-year-old joint venture with Fiat.
Moody's change of GMAC's outlook to negative reflects the significant business
ties between GM and GMAC that influence GMAC's origination volumes, asset mix,
and asset quality. GMAC's outlook change did not result from a change in Moody's
views regarding GMAC's intrinsic credit strength, including its resilient
earnings base and strong liquidity. GMAC has appropriately evolved its funding
profile by lengthening debt maturities and by tapping new sources of funding,
taking advantage of the liquidity and high quality of its finance and mortgage
assets. An important consideration in the rating differential between GMAC and
GM is the expectation that GMAC's unsecured creditors would have superior asset
recovery experience relative to the unsecured creditors of GM if the companies
were to come under severe stress. Moody's will continue to monitor GMAC's
capital levels and the relative characteristics of its pledged and unencumbered
assets.
Under the terms of the Fiat settlement, GM will pay Fiat (euro)1.55 billion to
terminate the Master Agreement (including the put option) and to acquire an
interest in key strategic diesel engine assets, and other important rights with
respect to diesel engine technology. Moody's believes that the acquisition of
the diesel engine assets and the related technology rights will enhance the
company's strategic position in the European market by ensuring access to diesel
engines. There is important long-term strategic and economic value to this
component of the transaction. However, the amount paid by GM to relieve itself
of the Fiat put exceeds the rating agency's expectations and contributes to the
negative outlook.
A key consideration in Moody's ongoing assessment of GM is the solid liquidity
of the automotive operations. At year end 2004, the company had approximately
$23 billion in cash, marketable securities and short-term VEBA. This compares
with $32 billion in automotive debt that has an average maturity of
approximately 19 years, with about $3 billion maturing during the next five
years. This strong liquidity position affords the company a critical financial
cushion as it attempts to implement its cost cutting initiatives and its new
product program. Moody's notes, however, that the strength of GM liquidity
position and its debt protection measures are moderated by the company's $54
billion unfunded OPEB liability.
Moody's also recognizes that GM, despite the operational and competitive
pressures it faces, generated over $4 billion in free cash flow during 2004.
During 2005, free cash flow could approximate $2 billion prior to the outflows
associated with the European restructuring and the payment associated with the
Fiat settlement agreement. General Motors Corporation, headquartered in Detroit,
Michigan, is the world's largest producer of cars and light trucks. GMAC, a
wholly-owned subsidiary of GM, provides retail and wholesale financing in
support of GM's automotive operations and is one of the worlds largest non-bank
financial institutions.
[GRAPHIC OMITTED]
Monday, February 14, 2005
General Motors Acceptance Corporation & Related Subsidiaries
Confirms at BBB (high) & R-1 (low)
Date of Release: February 14, 2005
Issuer Debt Rated Rating Action Rating Trend
General Motors Acceptance Corporation Commercial Paper Confirmed R-1 (low) Stb
-------------------------------------
General Motors Acceptance Corporation Commercial Paper Confirmed R-1 (low) Stb
--------------------------------------
(N.Z.) Limited
--------------
General Motors Acceptance Corporation Commercial Paper Confirmed R-1 (low) Stb
--------------------------------------
(U.K.) plc
----------
General Motors Acceptance Corporation Commercial Paper (guar. by Confirmed R-1 (low) Stb
--------------------------------------
of Canada, Limited GMAC)
------------------
General Motors Acceptance Commercial Paper Confirmed R-1 (low) Stb
--------------------------
Corporation, Australia
----------------------
GMAC Bank GmbH Commercial Paper Confirmed R-1 (low) Stb
--------------
GMAC Commercial Mortgage Bank Europe, Commercial Paper Confirmed R-1 (low) Stb
--------------------------------------
plc
---
GMAC Commercial Mortgage Japan, K.K. Commercial Paper Confirmed R-1 (low) Stb
------------------------------------
GMAC International Finance B.V. Commercial Paper Confirmed R-1 (low) Stb
-------------------------------
GMAC, Australia (Finance) Limited Commercial Paper Confirmed R-1 (low) Stb
---------------------------------
General Motors Acceptance Corporation Long-Term Debt Confirmed BBB (high) Stb
-------------------------------------
General Motors Acceptance Corporation Medium & Long-Term Debt Confirmed BBB (high) Stb
--------------------------------------
(N.Z.) Limited
--------------
General Motors Acceptance Corporation Notes & Debentures (guar. by Confirmed BBB (high) Stb
--------------------------------------
of Canada, Limited GMAC)
------------------
General Motors Acceptance Medium & Long-Term Debt Confirmed BBB (high) Stb
--------------------------
Corporation, Australia
----------------------
GMAC Bank GmbH Medium & Long-Term Debt Confirmed BBB (high) Stb
--------------
GMAC Commercial Mortgage Funding, plc Long-Term Debt Confirmed BBB (high) Stb
-------------------------------------
GMAC Commercial Mortgage Japan, K.K. Medium & Long-Term Debt Confirmed BBB (high) Stb
------------------------------------
GMAC International Finance B.V. Medium & Long-Term Debt Confirmed BBB (high) Stb
-------------------------------
Dominion Bond Rating Service ("DBRS") has confirmed the above ratings of General
Motors Acceptance Corporation ("GMAC"), with the trends remaining Stable.
General Motors Corporation ("GM"), GMAC's wholly owned parent, announced on
February 13, 2005, that GM has agreed to pay (euro)1.55 billion to Fiat S.p.A.
("Fiat") to terminate the Master Agreement (including the put option) and to
acquire an interest in key strategic diesel engine assets and other important
rights with respect to diesel engine technology and expertise. GM will take an
after-tax charge to earnings of approximately US$840 million. DBRS has confirmed
the ratings of GMAC and related subsidiaries, all with Stable trends, but has
placed the ratings of GM and General Motors of Canada Limited "Under Review with
Negative Implications", reflecting the weakening operating results and outlook.
While DBRS's ratings for captive finance companies are typically equivalent to
the credit strength of the operating parent ("parent"), DBRS policies have
always provided the opportunity whereby a captive finance company ("captive")
could be rated higher than the parent. Key general considerations for such an
event include:
(1) The value and first claim ability of the captive assets;
(2) The relationship between the captive and the parent;
(3) The stand-alone strength of the captive; and
(4) The level of ratings in the credit spectrum.
Based on an evaluation of these factors and all the related sub-factors, DBRS
has concluded that at the present time, the ratings for GMAC should be slightly
higher than the base ratings for GM. Along with these considerations, DBRS
continues to heavily weigh the strength of the parent in assessing the ratings
of this and any other captive subsidiary (driven first and foremost by the
captive's heavy dependence on the parent for products), which meaningfully
limits the degree to which captives can be rated above their respective parent
companies.
Note: General Motors Acceptance Corporation of Canada, Limited; General Motors
Acceptance Corporation (N.Z.) Limited; General Motors Acceptance Corporation,
Australia; GMAC Bank GmbH, GMAC Commercial Mortgage Funding, plc; GMAC
Commercial Mortgage Japan, K.K.; and GMAC International Finance B.V. debt is
guaranteed by General Motors Acceptance Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS ACCEPTANCE CORPORATION
-------------------------------------
(Registrant)
Dated: February 15, 2005 /s/ SANJIV KHATTRI
---------------- -------------------------------------
Sanjiv Khattri
Executive Vice President,
Chief Financial Officer and Director
Dated: February 15, 2005 /s/ LINDA K. ZUKAUCKAS
---------------- -------------------------------------
Linda K. Zukauckas
Vice President and Corporate Controller