DBRS Assigns LT Rating of BB (high) to General Motors Financial of Canada, Ltd Trend Stable

DBRS, Inc. (DBRS) today has assigned a Senior Unsecured Debt rating of BB (high) to General Motors Financial Company of Canada, Ltd. (GMF Canada or the Company). GMF Canada is an indirect, wholly owned subsidiary of General Motors Financial Company, Inc. (GMF), and the senior notes of GMF Canada are fully and unconditionally guaranteed by GMF (rated BB (high) by DBRS). As such, the ratings of GMF Canada are equalized with GMF. The trend on GMF Canada’s ratings is Stable reflecting that of GMF.

Concurrently, today DBRS has assigned a rating of BB (high) to the CAD 400 million Senior Notes due 2017 of GMF Canada reflecting the guarantee from GMF. Proceeds from the notes are expected to be used for general corporate purposes.

The ratings of GMF, which are one notch below that of its parent, General Motors Company (GM), reflect the weaker stand-alone credit profile than that of its parent and the lack of an explicit guarantee or support agreement from GM. The one notch differential in the ratings also considers GMF’s ownership, the increasing interconnectedness between GMF and GM, and the strengthening strategic importance of GMF to GM. The ratings also consider the financial support provided by GM to GMF. As a result of these considerations, DBRS sees the overall long-term success of GMF, as a captive finance company, as highly dependent on the success of GM, the parent. As such, DBRS views GMF’s increasing interconnectedness with and dependence on its parent as a key rating factor, thereby the ratings are closely linked. Ratings would be equalized with those of its parent should a support agreement from GM or an explicit guarantee of GMF’s corporate debt by GM be put in place.

Notes:
All figures are in Canadian dollars (CAD) unless otherwise noted.

The principal applicable methodology is Rating Captive Finance Companies (June 2010). Other methodologies used include Rating Finance Companies Operating in the United States (May 2008), Rating Auto Finance Companies Operating in the United States (May 2008), DBRS Criteria: Guarantees and Other Forms of Explicit Support (July 2013) and DBRS Criteria: Rating Holding Companies and Their Subsidiaries (January 2014). All DBRS methodologies and criteria can be found on DBRS website under Methodologies.

[Amended on February 18, 2015 to reflect actual methodologies used.]

The primary sources of information used for this rating include company documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

Lead Analyst: David Laterza
Rating Committee Chair: William Schwartz
Initial Rating Date: N.A.
Most Recent Rating Update: N.A.

For additional information on this rating, please refer to the linking document under Related Research.