GMAC is expected to receive some $21.4 billion in much needed asset-backed funding from
, reports say.
The fresh funding will help the automotive lender -- formerly a unit of
but now majority owned by private-equity giant Cerberus -- get much-needed liquidity in an asset-backed commercial paper market that has seized up considerably due to investor fears about credit quality.
Neither GMAC or Citi officials could immediately be reached for comment. But according to reports by
, the funds replace a $10 billion facility with Citigroup dating from August 2006.
Initially, Detroit-based GMAC will receive $14.4 billion in credit facilities. The firm may be able to obtain an additional $7 billion, the report says.
Alternative investment firm Cerberus Capital Management owns a 50.1% stake in the automotive and home lending business.
Scott MacDonald, head of research at investment firm Aladdin Capital, says the financing is a good sign for the overall market. The executive speculates that the funding may be used to help GMAC's beleaguered residential lending arm ResCap, which would be able to refinance its existing commercial paper debt with the new funds.
Asset-backed commercial paper typically serves as short-term funding for corporations such as home and car lenders, with the home or car assets functioning as collateral for the debt.