--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 26, 2005
(Date of report; date of
earliest event reported)
Commission file number: 1-3754
GENERAL MOTORS ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-0572512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Renaissance Center
P.O. Box 200 Detroit, Michigan
48265-2000
(Address of principal executive offices)
(Zip Code)
(313) 556-5000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
--------------------------------------------------------------------------------
Item 8.01 Other Events
On May 26, 2005, Dominion Bond Rating Service (DBRS) downgraded the long-term
debt rating of General Motors Acceptance Corporation to BBB from BBB (high), and
the short-term rating was downgraded to R-2 (middle) from R-1 (low). The trend
remains negative. Their press release follows.
DBRS Downgrades GMAC & Related Subs. To BBB, R-2 (mid), Trend Negative
Date of Release: May 26, 2005
Dominion Bond Rating Service ("DBRS") has today downgraded the long-term debt
ratings of General Motors Acceptance Corporation ("GMAC") and its subsidiaries
to BBB from BBB (high), and the Commercial Paper ratings have been downgraded to
R-2 (middle) from R-1 (low). The trends remain Negative.
This rating action is entirely due to DBRS's downgrade of the long-term debt
rating on General Motors Corporation ("GM"), to BBB (low) from BBB and the
Commercial Paper rating to R-2 (low) from R-2 (high). The rating trend for GM
also remains Negative. The rating action on GM reflects the deterioration in its
automotive operating performance, and the significant structural challenges
facing GM going forward. (See the separate concurrent DBRS press release for
General Motors Corporation.)
DBRS policies allow for a captive finance company to be rated modestly higher
than its parent. As such, DBRS currently rates debt of GMAC one notch higher
than that of GM, reflecting numerous considerations based on the following key
points: (1) The value and first claim ability of the captive assets; (2) The
relationship between GMAC and its parent GM; (3) The stand-alone strength of
GMAC; and (4) Where the ratings are in the rating spectrum.
GMAC has continued to demonstrate favourable earnings performance through 2004
and into 2005. The earnings contribution has been broad-based with solid
performance from the auto finance operations, mortgage operations, and sharply
higher insurance profits. DBRS anticipates moderately reduced performance for
2005, but at continued respectable levels.
Overall, liquidity, asset quality, and capital considerations remain
respectable. GMAC has more than sufficient maturing receivables to meet maturing
debt obligations. Access to other diversified funding sources, including whole
loan sales, provide alternatives. In addition, management is considering various
options that could monetize some of the value in certain operating units.
However, GMAC is challenged by rising funding costs, reduced access to unsecured
debt markets at a reasonable cost, and rising interest rates in general. The
impact of increased reliance on secured financing, whole loan sales, and a
declining receivable portfolio helps provide an offset, but may have negative
implications. Firstly, the reduction in unencumbered assets may reduce asset
coverage available to holders of unsecured debt, unless there is a commensurate
decline in unsecured debt. Also, with a downsized receivable portfolio, fixed
costs of operating the business are spread over a smaller asset base, thereby
affecting profitability.
First and foremost, however, GMAC is impacted by the credit strength of its
parent.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS ACCEPTANCE CORPORATION
-------------------------------------
(Registrant)
Dated: May 26, 2005 /s/ SANJIV KHATTRI
---------------- -------------------------------------
Sanjiv Khattri
Executive Vice President,
Chief Financial Officer and Director
Dated: May 26, 2005 /s/ LINDA K. ZUKAUCKAS
---------------- -------------------------------------
Linda K. Zukauckas
Vice President and Corporate Controller