Moody's upgrades GMAC, cites less bankruptcy risk

NEW YORK, June 10 (Reuters) - Moody's Investors Service on Wednesday raised its rating on auto and mortgage lender GMAC LLC by one notch, saying there is less bankruptcy risk because of support from the U.S. government.

Moody's raised GMAC's senior unsecured rating to Ca, or 10 steps below investment grade, from C, and said it may raise the rating again. A Ca rating is still one of the lowest possible ratings above default.

The rating upgrade reflects significant capital injections by the government that have improved GMAC's liquidity, the firm's partial ownership by the U.S. government, and GMAC's role in the government's efforts to prop up the auto industry, Moody's said in a statement. A continuing concern, however, is that GMAC must still raise substantial equity to comply with results of recent government stress tests, Moody's said.

(Reporting by Dena Aubin, Editing by Chizu Nomiyama)