UPDATE 2-GMAC may become bank, eyes massive debt overhaul
* may become bank holding company
* targets significant new capital
* plans large debt swap, to reduce overall debt load
* Moody's downgrades, further rating cuts possible (Adds Moody's downgrade of GMAC)
NEW YORK, Oct 30 (Reuters) - GMAC LLC, the money-losing auto finance and mortgage provider, on Thursday confirmed it was seeking to become a bank holding company, and said it plans to overhaul and slash its debt load, barely four months after completing a $60 billion refinancing package.
The Detroit-based lender said it was in talks with federal regulators about becoming a bank holding company, which would make it easier to participate in U.S. Treasury Secretary Henry Paulson's $250 billion bank recapitalization plan.
On Tuesday, GMAC said it won the right to take part in a U.S. Federal Reserve commercial paper program designed to help unlock credit markets.
Late on Thursday, Moody's Investors Service cut its long-term ratings on GMAC's senior unsecured debt to "Caa1" from "B3" and said it may cut it further due to the exchange offer plan that could heighten the risk for unsecured creditors.
"Moody's believes there is a possibility that GMAC's offering will be a distressed exchange," it said, adding that distressed exchanges can cause debt holders to recognize an economic loss. Continuación...