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DCR Rates GMAC's 250 Million Deutschemark Eurobond Offering 'A-'

14 July 1997

DCR Rates GMAC's 250 Million Deutschemark Eurobond Offering 'A-'

    CHICAGO, July 14 -- Duff & Phelps Credit Rating Co. (DCR) has
assigned a 'A-' (Single-A-Minus) rating to General Motors Acceptance Corp.'s
(GMAC) 250 million deutschemark Eurobond offering.  The 5.125 percent notes
were priced at 101.43 and mature December 23, 2003.
    GMAC's ratings reflect its close marketing and financial ties with parent
General Motors Corp. (GM) and GMAC's typically strong asset quality and
profitability measures.  GM's restructuring efforts, including recent labor
contract settlements, are critical to its ongoing efforts to achieve a leaner
cost structure and more effective product line strategy.
    DCR reaffirmed GM and GMAC's ratings following GM's announcement that it
will spin off its Hughes defense and aerospace unit and merge it with Raytheon
Co.  DCR will continue to monitor workplace reception of GM new model
introductions.  Due to the continued growth in the retail operating lease
portfolio and the partial residual risk borne by GM, DCR believes the credit
rating relationship between GM and GMAC has been strengthened.
    First quarter 1997 earnings were $372 million versus $309 million in first
quarter 1996.  The quarterly earnings trend has reflected an improved net
interest margin associated with a return to a traditional funding mix, partly
offset by higher loss provisions to bolster retail reserve levels.  Retail
finance volumes will remain partly dependent on GM's sales volumes and
incentives.
    Retail asset quality measures have eased somewhat following the strong
industry wide performance in recent years.  In response, management has
tightened credit standards on new originations and instituted more aggressive
collections efforts.  These strategies are expected to stabilize credit
quality.  DCR continues to monitor the impact of rising personal bankruptcy
filings on the consumer finance industry.
    Leverage has increased slightly due to the improved cost of balance sheet
debt relative to securitization funding.  Leverage is now targeted in the 9-
to-10:1 range.  Bank facilities limit leverage to 11:1.

SOURCE  Duff & Phelps Credit Rating Co.