S&P Cuts GMAC, Residential Capital Ratings
Standard & Poor's on Friday cut its credit ratings on GMAC, the auto-financing business owned by Cerberus Capital Management and General Motors, and mortgage unit Residential Capital.
S&P cut GMAC three notches to B+ and Residential Capital four notches to B, the ratings agency said in a statement. It said the ratings outlook for both companies was negative, suggesting further downward pressure.
The agency said both companies faced difficult funding environments, while Residential Capital, which is owned by GMAC, also faces potential lower support from ultimate parents Cerberus and GM.
It said possible further losses at Residential Capital put it at risk of breaching a covenant, boosting the probability of support being needed.