Fitch Affirms AmeriCredit Corp.'s IDR at 'B-'; Outlook Stable

--Long-term Issuer Default Rating (IDR) at 'B-';

--Senior debt at 'B/RR3'.

Approximately $554 million of debt is affected by this action. The Rating Outlook is Stable.

The rating affirmation reflects ACF's competitive position in the fragmented auto finance market, experienced management team, and consistent servicing and collections capabilities over varying economic cycles. These attributes are offset by limited funding flexibility, negative asset quality trends, and reduced profitability given extended disruptions in the capital markets which have yielded significantly higher funding costs for the company.

ACF completed a $725 million Term Asset-Backed Securities Loan Facility (TALF) transaction in July 2009 and was able to sell all subordinate bonds, primarily, to traditional asset-backed securities (ABS) investors. Fitch views this transaction as an encouraging step; however, it remains unclear whether the company will be able to economically access the ABS markets beyond the expiration of the TALF program in March 2010. Furthermore, the senior subordinate transaction had initial enhancement levels of 28.1%. Given the higher enhancement levels, Fitch expects the company to operate with higher capitalization levels going forward, which will limit its growth opportunities and could put the company at a competitive disadvantage when asset quality trends improve.

In March 2009, ACF successfully renegotiated the covenants of its master warehouse facility and extended the term until March 2010 in exchange for additional credit enhancement and a 700-basis point increase in the cost of funds. The borrowing capacity was reduced from $2.25 billion to $1.1 billion in March and further to $1 billion in July in order to align borrowing capacity with origination levels. Fitch believes the company will be able to renew and/or extend this facility in March; however, pricing and/or terms could be adjusted further. The higher funding costs will continue to pressure ACF's profitability prospects relative to historical levels.

The Stable Outlook reflects the expectation that ACF will be able to meet its debt service obligations for the foreseeable future and that current liquidity and capitalization are adequate for the rating category. Negative rating action could result from material deterioration in the performance of more recent vintages that negatively affects the company's profitability. Conversely, positive rating momentum could result from the ability to economically access the ABS markets on a consistent basis beyond the expiration of the TALF program, the renewal of the warehouse facility at a level which will provide competitive and operating flexibility, an improvement in asset quality metrics, and an ability to post consistent core operating earnings.

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SOURCE: Fitch Ratings

Fitch Ratings 
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Peter J. Shimkus, +1-312-368-2063 (Chicago) 
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