Medium Term Notes blog update courtesy of the Fort Mill Times.
Fitch Ratings expects to assign a ‘BB+’ rating to General Motors Financial International B.V.’s (GMFI) EUR650 million senior unsecured notes issuance under its EUR10 billion Euro Medium Term Note (EMTN) program. The notes will pay a coupon of 0.85% and will be due in February 2018.
KEY RATING DRIVERS
The EUR650 million notes will be guaranteed by General Motors Financial Company, Inc. (GMF) and by GMF’s principal operating subsidiary in the U.S., AmeriCredit Financial Services, Inc. (AFSI). The notes will rank pari passu with GMF’s other senior unsecured debt issuance, and therefore, the ratings assigned to the notes is equalized with GMF’s existing long-term Issuer Default Rating of ‘BB+’. The issuance is in line with GMF’s strategy to increase the proportion of unsecured debt in its capital structure and does not result in a significant increase in its leverage. As a result, there is no rating impact on GMF’s IDR or Positive Rating Outlook.
GMF’s ratings reflect the direct linkage to its parent, General Motors Company’s (GM, rated ‘BB+’, Positive Outlook by Fitch) ratings. Fitch considers GMF to be a ‘core’ subsidiary of GM based on actual and potential support provided to GMF from GM, increasing percentage of GMF’s earning assets related to GM, and strong financial and operational linkages between the companies. The ratings also reflect GMF’s seasoned management team, improving funding profile, consistent operating performance, good asset quality, and adequate capitalization and liquidity.
RATING SENSITIVITIES
The expected ratings assigned to the proposed notes are equalized with GMF’s IDR, and therefore would be expected to move in parallel with any changes in GMF’s ratings. The Positive Rating Outlook on GMF is linked to that of its parent, GM. GMF’s ratings will move in tandem with GM. Any change in Fitch’s view on whether GMF remains core to its parent could change this rating linkage with its parent. A material increase in leverage without a corresponding decrease in the risk of the portfolio, an inability to access funding for an extended period of time, and/or significant deterioration in the credit quality of the underlying loan and lease portfolio, could become constraining factors on the parent’s ratings.
Fitch has assigned the following ratings:
General Motors Financial International B.V. (GMFI)
–EUR650 million senior unsecured notes due February 2018 ‘BB+ (EXP)’
Fitch currently rates GMF as follows:
–Long-term IDR ‘BB+'; (Outlook Positive)
–Senior unsecured debt ‘BB+’.
Fitch currently rates GMFI as follows:
–Long-term IDR ‘BB+'; (Outlook Positive)
–Euro Medium Term Note Program ‘BB+’.
by 