OldNavySailor

GMAC's Recalcitrant Bondholders

Today I sold three GMAC bonds out of my retirement portfolio that will mature next year (2009). I took a loss of .50 cents on the dollar but it will be much worse when GMAC goes bankrupt.

GMAC is not offering to buy the debt of all bondholders, just selected European and U.S. bonds based on interest rate and maturity date. I think this is a mistake if they want to raise cash quickly. They should open up the offer to all holders of their debt via a Dutch Auction process.

The decision to sell was based on my opinion that no "white knight consortium" will come to GMAC's rescue: not the parent company Cerberus, not bondholders, not investors, certainly not GM and not the government. They have too much debt caused by poor business dealings.

Note - I bought a 2006 Chevrolet Impala new with GMAC 0% financing. Maybe that's one of the reasons why GMAC is going bankrupt!



On Dec 10 06:12 PM RossTheDog wrote:

> I hold GMAC bonds in a Fidelity account. I never was contacted about
> the tender offer. When I checked with the fixed income specialist
> at Fidelity, I was told that
> not all bond holders could participate. And although the bonds I
> held were included in the offer, I was an investor class excluded
> from the offer. He explained that it was for institutional investors
> only!! Anyone care to explain what is going on?