Even subprime auto finance is showing up green as the economic recovery amps up. KBW last week lowered its investment rating for AmeriCredit Corp. not because the company is doing poorly, but because the investment bank says it is doing too well. KBW’s assessment prompted the i-bank to turn in a positive report for subprime auto finance. An excerpt:
The subprime auto finance industry should benefit as access to funding continues to improve and credit losses decline. However, increased competition, potentially more limited funding availability and still high unemployment may pressure earnings growth.
Welcome to 2003, folks.
Marcie: This has been priced into GMAC debt since mid March. GMAC has several billion in callable bonds all with coupons above 6%. The FDIC debt so far has been priced below 2.3% and this upcoming traunch will probably be priced similarily. This will be very good news for existing GMAC bond holders as the market value of the existing GMAC debt will get market support and GMAC will begin calling their high coupon pieces as soos as possible. All of this restructuring will give GMAC a terrific leg up going into 2010 and will be enough to carry them into 2012. .Most of their current debt is callable in 2012 and after. GMAC is on a path to a very good looking balance sheet… add in an uptick in auto finance in 2011 and 2012 and we taxpayers stand to make a good return on our investment.
Any “GOOD” news is welcome. I think we will all see that the real competion, going forward, will come from the smaller regional companies and not the larger independent auto finance companies.
I agree Frank, as I am seeing new players finally securing some funding from Wall Street.
It that a pun: Shoots grow; Chutes are very fast declining channels.
Read it as you’d like, Jim. 🙂