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DETROIT — Auto lender GMAC Financial Services on Wednesday said it has priced a $4.5 billion note offering guaranteed by the Federal Deposit Insurance Corporation under its temporary liquidity guarantee program.
GMAC said the securities offering includes $3.5 billion of senior fixed-rate notes and $1 billion senior floating-rate notes, both of which are due in December of 2012.
The company said it intends to use the funds from the offering to offer more credit to consumers and businesses, as well as for general corporate purposes.
The government holds a 35.4 percent equity stake in GMAC after providing $12.5 billion in aid to keep loans flowing to buyers of GM and Chrysler cars.
In return for giving GMAC $5 billion in aid in December, the government got 5 million shares and told the company it must extend financing services to bailed-out Chrysler LLC — which is preparing to emerge from bankruptcy protection. Last month, the Treasury Department announced a new $7.5 billion injection for GMAC. Of that, $4 billion is going to support its new loans to Chrysler dealers and customers. The remaining $3.5 billion is going toward boosting GMAC's capital base — still short of the $11.5 billion the government's "stress test" last month showed the company needs to stay afloat if the economy worsens.
GMAC's $4.5 billion debt sale is a move to bolster that capital position. To help GMAC raise capital, the FDIC took the rare step of allowing the junk-rated company to gain access to its debt guarantee program. GMAC will be allowed to issue as much as $7.4 billion in FDIC-backed debt. The FDIC guarantees the debt that GMAC would issue in case the company defaulted on payment.
