(The following statement was released by the ratings agency)
NEW YORK, Sept 27 - AmeriCredit Corp.'s (BB-/Stable/--) announced completion of a $500 million equity issuance is viewed by Standard & Poor's as a positive development.
The net proceeds from the common stock offering will be used to provide a greater portion of the up-front credit enhancement required on future securitizations, and could increase to as high as 12%. By making a larger up-front deposit on a transaction, the company would shorten the time until it would begin receiving cash from the deals. By slowing its current $2.4 billion rate of originations growth per quarter, AmeriCredit will be able to preserve cash and enhance its liquidity position.
However, Standard & Poor's continues to remain concerned about potential deterioration in asset quality metrics in this weak economic environment. Should the company experience further asset quality deterioration over and above its expected delinquency and annualized net losses in the 5.0%-5.4% range, ratings would likely be negatively affected. While raising $500 million in equity enhances the firm's liquidity position in the short term, Standard & Poor's will continue to monitor liquidity closely.