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GMAC to Sell $618M of Auto Loan-backed Bonds

October 6, 2010
2 min to read


GMAC Bank, a unit of Ally Financial Inc., plans to sell 446.5 million euros ($618 million) of securities backed by German auto loans in its first public offering of the debt in Europe.


The top-rated bonds will have an expected average life of 1.6 years, three people told The Detroit News. They declined to be identified before the deal is completed. Deutsche Bank AG and Royal Bank of Scotland Group Plc are managing the transaction.

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The securities will be sold through GMAC E-CARAT 2010, a specially created issuing vehicle. The issue will total 507 million euros and two lower-rated portions may be retained, the people said.


European lenders are increasing sales of asset-backed securities as rewards demanded by investors to buy the debt declines. Banks sold a total 13.1 billion euros of asset-backed bonds in September, mostly linked to mortgages and auto loans, in the busiest month since the second half of 2007, according to JPMorgan Chase & Co.


Investors demand about 80 basis points more than the euro interbank offered rate to buy top-rated bonds backed by European auto loans compared with a spread of 135 basis points at the end of 2009, according to JPMorgan Chase & Co data.


GMAC will meet investors next week before opening books on the deal, the people said. Ally Financial sold $584.9 million of bonds backed by loans in August to finance U.S. auto dealer inventories, a person familiar with the transaction told The Detroit News.

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