GMAC Smartnotes at 9%

[retire@40]

Coupon:   9.000%
Yield:   9.170%
Interest Paid Monthly
Maturity:   7/15/15
Callable:  7/15/10(‡)
Price:  100.00
Moody's: Baa2
S & P: BB
CUSIP: 3704A0D58

(‡) Callable at 100% beginning on the call date above and every call date thereafter with 30 days notice.

 

[justin]

Nice junk bond high yield bond. The interest rate is about twice the 10 year AAA corporate bond yield.

 

[Dante]

Here are three more. Sorry for the non-formatted text below.

6.000% Semi-Annual 1/15/07 NC YES§ 100.00 6.000% Baa2 BB 3704A0C83
6.450% Monthly 7/15/07 NC YES§ 100.00 6.537% Baa2 BB 3704A0C91
7.150% Quarterly 7/15/08 NC YES§ 100.00 7.214% Baa2 BB 3704A0D25

The above 3 are not callable. The shortest one (1.5 years) or the 2-year one seems okay to me - pros and cons have been discussed ad infinitum i believe in other threads.

I am planning to invest just $20K in the 2-year 6.45% note - get $107.50 each month in interest and pay my CATV/Cable Modem bill with it. Redeem the prinicipal in 2 years - I don't believe GMAC will NOT be "there" in 2 years.

Dante

 

[WanderALot]

How does one go about buying any of these? low fee or no fee? My impression was that buying bonds directly (as opposed to a bond fund) are not easy/cheap.

 

[wabmester]

The bonds are selling at par, and you should be able to buy them through your broker. I picked up a few, but they are rated as junk.

Matha posted this article about the linkages between GM and GMAC:

http://www.larouchepub.com/other/2005/3211gmac.html

 

[dandan14]

How does one go about buying any of these? low fee or no fee? My impression was that buying bonds directly (as opposed to a bond fund) are not easy/cheap.

You can buy individual bonds on Etrade for a fairly modest fee compared to a lot of brokers. (I bought some of the GMAC bonds a few months ago.)
I can't seem to find the commission schedule for Etrade at the moment, but if I remember right, it was something along the lines of $25-$30. For the 5 notes I bought, the commission dropped my YTM by a few tenths of a percent.

 

[Mr._johngalt]

I'm a buyer at 9%. Unfortunately I have no cash to invest and even I am
not confident enough to borrow the money.

What makes sense to me is a "divorce" of GMAC from GM. GMAC looks okay on its own. This is likely at some point IMHO.
A GM bankruptcy filing is possible but I still think quite unlikely, although
rattling the old Chapter 11 saber gets people's attention.

(BTW, damn fine metaphor there)

JG

 

[Mr._johngalt]

I've been studying this some more. I am as bullish as I can be on both
companies (GM and GMAC). Who was it that said buy when there is blood in the streets? GMAC is making billions, GM overseas is okay too. Even GM itself has enough cash to fund many years of big
losses. If only I could come up with some cash. Don't have anything I want to sell.

JG

 

[Dawg52]

If I could roll the clock back 20 years or so I might buy some, but I'm tooooo conservative at this point. I wouldn't touch them unless you can afford to lose your investment.

 

[Mr._johngalt]

If I could roll the clock back 20 years or so I might buy some, but I'm tooooo conservative at this point. I wouldn't touch them unless you can afford to lose your investment.

Well, as I have said before, I coudl lose it all and still not have to go back to work. I would be one unhappy camper though.

BTW, for you folks who enjoy this stuff, we have about a third of our TOTAL net worth in junk/high yield corp. bonds. God hates a coward

JG

 

[treypar]

I have about 5% in junk bonds. That is about my max for this asset class.

 

[onthefence]

Well, as I have said before, I coudl lose it all and still not have to go back to work.  I would be one unhappy camper though. 

BTW, for you folks who enjoy this stuff, we have about  a third of our TOTAL net worth in junk/high yield corp. bonds.  God hates a coward 

JG

I am neither as well to do nor as bullish as you. I must be a coward In the unlikely event (I don't know for sure) that GM and GMAC file for bankruptcy relief, I wonder whether there are facts that support "substantive consolidation" of the two companies. In that scenario, their assets and liabilities may be pooled to satisfy the claims of creditors.

 

[Mr._johngalt]

I am neither as well to do nor as bullish as you.  I must be a coward   In the unlikely event (I don't know for sure) that GM and GMAC file for bankruptcy relief, I wonder whether there are facts that support "substantive consolidation" of the two companies.  In that scenario, their assets and liabilities may be pooled to satisfy the claims of creditors.

Now that would really suck!

JG

 

[dex]

You can buy individual bonds on Etrade for a fairly modest fee compared to a lot of brokers. (I bought some of the GMAC bonds a few months ago.)
I can't seem to find the commission schedule for Etrade at the moment, but if I remember right, it was something along the lines of $25-$30. For the 5 notes I bought, the commission dropped my YTM by a few tenths of a percent.

No commission if you buy 20 or more bonds