TEXT - Fitch may raise General Motors Financial Co 'BB' rating

Wed Nov 28, 2012 2:59pm EST

Nov 28 - Fitch Ratings has placed General Motors Financial Company, Inc.'s
(GMF) 'BB' long-term Issuer Default Rating (IDR) on Rating Watch Positive,
following the company's announcement on Nov. 21, 2012, that it has entered into
an agreement with Ally Financial Inc. (Ally) to acquire Ally's
international operations (IO) in Latin American, Europe, and China for $4.2 
billion in order to provide an alternative source of financing to General Motors
Company's (GM) consumers and dealers on a global basis.

The Rating Watch Positive reflects Fitch's view that, following the successful 
close of the Ally IO acquisition, GMF will be a core subsidiary to its parent, 
GM, as defined in Fitch's criteria 'Rating FI Subsidiaries and Holding 
Companies,' dated Aug. 10, 2012. As a result of being viewed as core subsidiary,
Fitch would expect to resolve the Rating Watch and align GMF's ratings with 
those of GM (LT IDR: 'BB+', Rating Outlook Stable), subject to regulatory 
approval and anticipated transaction closing, which is expected to be in stages 
through mid-2013. 

The acquisition will increase GM sales coverage, as defined as the percentage of
GM unit sales in markets where GMF has presence compared to total GM unit sales,
to approximately 80% compared to the current 30%. 

Fitch believes the acquisition will be funded through cash on the balance sheet,
drawings on the new inter-company bank facility and unsecured debt issuances. 
Additionally, GM is expected to inject approximately $2 billion of cash into GMF
to increase its equity and maintain an appropriate pro forma capital structure. 
The acquisition is expected to double GMF's assets to approximately $33 billion 
while its liabilities, including consolidated debt, will increase to 
approximately $27 billion. 

Historically, GMF has had an articulated long-term leverage target, as defined 
as earning assets to tangible equity, of 6.0 times (x) - 8.0x. While the company
has been operating below its target, Fitch believes leverage will be within the 
articulated range following the Ally purchase. 

Rating Drivers and Sensitivities 

Resolution of the Rating Watch Positive will be evaluated in the context of the 
success of the closing and integration of the Ally IO assets (expected to close 
in stages through mid-2013) and GM's $2 billion cash injection into GMF.  The 
ratings could be upgraded and equalized to those of its parent, based on Fitch's
belief that the acquisition makes GMF a core subsidiary to GM. The equalization 
of the ratings would be supported by GM assets accounting for a larger portion 
of GMF's total portfolio, an increase in GM-related earnings at GMF, the $2 
billion cash injection from the parent, and GMF's ability to borrow on the new 
GM bank facility. 

Conversely, the ratings could be affirmed in the event GMF is unable to 
successfully close and integrate the Ally assets, the parent does not provide 
additional equity to maintain adequate capitalization at GMF, and/or GMF is 
unable to tap the GM revolver for additional liquidity.

Fitch has placed the following ratings on Rating Watch Positive:

General Motors Financial Company
--Long-term IDR of 'BB'; 
--Senior Unsecured of 'BB'.
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