GM, GMAC debt protection costs jump on GM loss: analyst
NEW YORK (Reuters) - The cost to protect bonds of General Motors Corp and its former finance subsidiary GMAC jumped on Wednesday after GM posted its largest quarterly net loss, according to an analyst at a major bank.
GM's debt protection costs rose 30 basis points to 40 basis points to around 600 basis points, which means it costs $600,000 annually to insure $10 million of debt for five years. Similar costs for GMAC rose about 20 basis points to 640 basis points, or $640,000.
GM posted its largest quarterly net loss, reflecting a $39-billion charge related to unclaimed tax credits and a loss at GMAC. Total revenue fell to $43.8 billion from $48.9 billion a year earlier.
The cost to insure GM's bonds with credit default swaps had risen by as much as 55 basis points earlier in the session.
GM's 8.375 percent notes due in 2033 are trading at 89 cents on the dollar compared to 89.75 cents on Tuesday, while GMAC's 8 percent notes due in 2031 are trading at 89.1 cents from 90.5 cents, according to MarketAxess.
