GMAC Offers $2.9 Billion in Debt
The General Motors Acceptance Corporation (GMAC), previously owned by General Motors, has offered $2.9 billion of three-year bonds in the private debt market. Through TARP, the government has already provided $12.5 billion in capital for GMAC, a consumer lending company, at an estimated cost of over $9 billion to taxpayers.
According to a Wall Street Journal article today, GMAC has been the only financial company with a junk credit rating to receive backing from the FDIC’s liquidity guarantee program. However, with the FDIC backing, GMAC’s bonds will be rated AAA. The article reported that several financial firms have expressed interest in the bodns. The offering came as GMAC was discussing the possibility of having the government provide another capital infusion between $2.8 to $5.6 billion.
The FDIC’s guarantee program is set to expire at the end of this week. Yet, eligible companies will be allowed to issue guaranteed debt in emergencies, but at a high premium.