AmeriCredit Put on Watch for Ratings Downgrade
An increase in loan losses and continued economic uncertainty led Standard & Poor’s today to put AmeriCredit Corp. on watch for a possible ratings downgrade.
The lender’s net charge-offs were 7.3% in the third quarter, an increase of 200 basis points from the same quarter a year ago, according to S&P. That number is expected to continue rising as the economy continues to remain anemic. An increase in losses could soak up much of AmeriCredit’s cash on hand, possibly triggering a default on its warehouse lines, S&P reported.
S&P said it will continue to monitor AmeriCredit’s liquidity position. AmeriCredit yesterday announced a loss of $1.7 million in the third quarter.
Shares of AmeriCredit [ticker: ACF] opened at $4.66 this morning and dropped to as low as $3.90 before rebounding to $4.70 in mid-afternoon trading.
