GM, in IPO, cites Ally ties as risk to potential investors

There's another sign that General Motors Co. could be distancing itself from its former captive finance company. In the registration document for its upcoming initial public offering, GM identifies its relationship with Ally Financial as a risk to potential investors.

Ally, formerly GMAC Financial Services, has suffered a decline in its credit rating in recent years, GM said in the filing. That could hurt the lender's ability to offer dealers and retail customers competitive rates.

Meanwhile, the automaker is acquiring AmeriCredit Corp., an independent subprime finance company, and intends to use it as the platform for a new captive finance company.

But Ally's credit rating has been climbing since early this year.

Four ratings agencies have upgraded Ally's debt ratings several notches, improving access to capital and lowering the average interest rate that the lender pays on debt by 1 percentage point over the past year, Ally told financial analysts this month.

As of the second quarter, Ally had completed more than $25 billion in funding transactions, spokeswoman Gina Proia said. Since the end of June, the bank had raised $1.75 billion in a debt offering of unsecured notes and $1.04 billion selling retail auto loans as securities, she said.

In the second quarter, Ally's cost of funds was 4.2 percent, down from 5.3 percent in the corresponding period last year. As a comparison, Ford Motor Credit Co. reported that it paid an average of 4.7 percent on its debt in the second quarter. Toyota Financial Services, which has investment-grade credit ratings, reported that it paid an average of 2.51 percent on its debt.

GM spokeswoman Susan Waun said federal regulations prohibit the automaker from commenting on the IPO filing. Instead, she referred to CFO Chris Liddell's public affirmation of Ally as GM announced its intent to buy AmeriCredit in July.

In late 2006, GM sold 51 percent of GMAC to investors led by Cerberus Capital Management. Federal law required the company to reduce its stake much more when GMAC was converted to a bank holding company in late 2008.

After investing more than $17 billion in Ally, the U.S. Treasury Department has a 56 percent stake in the lender. The U.S. Treasury owns 61 percent of GM.

GM's registration statement says its arm's-length relationship with Ally is a risk because Ally "no longer is subject to contractual wholesale funding commitments or retail underwriting targets."