US: Chrysler Financial borrowing costs could rise - report
Chrysler's finance unit could see its borrowing costs rise amid the continuing credit market turmoil, as the annual renewal of a credit facility is due in early August, a source familiar with the situation told a news agency.
Details of the renewal of the US$30bn facility, used to finance Chrysler vehicle sales, are still being finalised, the source told Reuters, which noted this could mean an increase in borrowing costs as the credit market continues to be rough.
According to the report, the Wall Street Journal (WSJ), citing anonymous sources, reported at the weekend that the financing unit was likely to see borrowing costs rise when it rolled over about $30bn of short-term debt backed by the loans and leases it makes.
The amount of the increase in Chrysler Financial's interest costs was not clear, but the spread was expected to be more than 1 percentage point over Libor, which is at about 2.8% now, the paper said, according to Reuters.
The WSJ had said that bankers led by JP Morgan Chase & Co were pushing hard to persuade more than 20 banks to renew the facility - backed by car loans, leases and loans to dealers - that was issued by the auto-finance company last year when it was split out of the former DaimlerChrysler.