GMAC Bonds Climb As Board Considers Bids
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GMAC Bonds Climb As Board Considers Bids

General Motors Acceptance Corporation's 8% '31 notes traded up to over par after it was reported that its parent General Motors Corp.

General Motors Acceptance Corporation's 8% '31 notes traded up to over par after it was reported that its parent General Motors Corp. will examine new bids for a controlling stake in the finance unit. The bonds traded up three points to 101 1/2. The news also caused GMAC's five-year credit default swaps to tighten 100 basis points to 330.

GM's board will reportedly meet Feb. 6 to examine the offers. Citigroup and Cerberus Capital Management are two potential bidders. Wachovia and Kohlberg Kravis Roberts & Co. may also put in a joint bid, according to the Financial Times. A spokesman at Wachovia did not return calls. A spokesman at KKR declined comment. Officials at Citigroup and Cerberus did not return calls.

GM announced last October that it may sell a controlling stake in the company to a strategic partner (CIN, 10/05). In December, GMAC's bonds fell after Wells Fargo and Bank of America walked away from a deal to buy the business (CIN, 12/05). General Motors has since continued to shop the deal. A GM spokesman declined to comment on the board's scheduled examination of bids. A spokeswoman for GMAC did not return calls.

GMAC has performed much better than GM's ailing automotive business. It earned $2.8 billion in 2005, slightly lower than the $2.9 billion it earned in 2004. By comparison, GM's North American auto division reported a loss of $5.6 billion in 2005, compared to earnings of $1.1 billion in 2004, according to GM.

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