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DCR Rates GMAC (Canada) 250 Million Deutschemark Eurobond Offering 'A-'

21 July 1997

DCR Rates GMAC (Canada) 250 Million Deutschemark Eurobond Offering 'A-'

    CHICAGO, July 21 -- Duff & Phelps Credit Rating Co. (DCR) has
assigned an 'A-' (Single-A-Minus) rating to General Motors Acceptance Corp. of
Canada, Ltd.'s (GMAC Canada) 250 million deutschemark Eurobond offering,
guaranteed by General Motors Corp.  The 5.125 percent notes were priced at
101.43 and mature December 23, 2003.
    GMAC Canada'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 for
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
industrywide 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.