General Motors Acceptance Corp.‘s five-year credit default swaps tightened 75 basis points to 460 as Japanese bank Norinchukin reportedly joined a U.S. firm-led consortium to buy a stake in the finance company. Its 8% ’31 bonds moved up three-and-a-half points to 92.
GMAC’s credit default swaps have been volatile since parent General Motors Corp. said last October that it would consider bids for a controlling stake in its finance subsidiary. The current consortium of investors bidding for the company is led by hedge fund Cerberus Capital Management and Citigroup. A Citigroup spokeswoman declined to comment on the bid. A Cerberus spokesperson did not return calls. Last month, Wachovia Bank dropped out of a joint bid with Kohlberg Kravis Roberts & Co. causing GMAC’s CDS to widen 60 basis points to the same level they are currently trading at. A GMAC spokeswoman did not return calls.
GM is seeking to sell a majority stake in GMAC to preserve an investment-grade rating on the company. Last week, General Motors reduced its equity stake in Suzuki Motor Corp. to 3% from 20.4%. It expects to realize $2 billion in cash proceeds from the sale, which it will use to improve its balance sheet and liquidity.