GM: Asset-Backed Securities Break Typical Analysis
By Chris Ridder: I reported last week, in GM: Turbocharged By Subprime Under The Hood, on the deteriorating credit quality of the receivables on General Motor's (GM) balance sheet. I noted the very large increase in receivables with a credit score under 540, up to over 78% from prior year, and the dropping of receivables with scores above 600.
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This leads one to ask the question: "Where did all these receivables go?"The short answer is that they were sold off by securitizations as Asset Backed Securities. One can see on page 10 of GM's press release the category, "GM Financial finance receivables, net (including gross finance receivables transferred to SPEs of $3,357 and $3,295)" under current assets, and "GM Financial finance receivables, net (including gross finance receivables transferred to SPEs of $5,742 and $5,773)" under non-current assets on the Balance Sheet.Selling receivables to a "Special Purpose Entity" isComplete Story »