Fitch Initiates 'BB-' IDR for Daimler Chrysler Financial Services America LLC

Business Wire, July 2, 2007

NEW YORK -- Fitch has initiated rating coverage on Daimler Chrysler Financial Services America LLC (CFS) by assigning the following ratings:

--Long-term Issuer Default Rating (IDR) 'BB-';

--Short-term Issuer Default Rating (IDR) 'B';

--$4 billion first lien term loan 'BBB-';

--$2 billion second lien term loan 'BB'.

The Rating Outlook for CFS is Stable.

The assignment of CFS' IDR rating follows the expected acquisition of 80.1% of Chrysler Holding LLC, the parent of CFS by CG Acquisition Co, an affiliate of Cerberus Capital Management L.P. As part of the transaction, all intercompany debt from Daimler Chrysler AG to CFS will be repaid.

The IDR rating of CFS reflects a one-notch lift over that of Chrysler LLC (Chrysler). This reflects the structural protections put in place to insulate CFS creditors from potential issues at Chrysler. CFS and Chrysler will operate as separate legal entities, with not cross-collateralization or guarantees with respect to each entity's financing. Relations and transactions between the two companies are governed under a master services agreement and each company will have a separate board of directors. While CFS primarily finances Chrysler dealers and their customers, Fitch believes the structural protections are adequate at the current ratings level, to recognize a ratings distinction in the IDR ratings between CFS and Chrysler. Nonetheless, Fitch will link the ratings of CFS to Chrysler, given that Fitch believes CFS performance is highly correlated with that of Chrysler. As such a change in ratings of Chrysler would result in a similar change to CFS.

Aside from the strong relationship with Chrysler and relevant structural elements, Fitch regards CFS as a well managed captive finance company. CFS has demonstrated consistent credit quality in its retail, lease, and wholesale automotive portfolios over an extended period. In addition, CFS is currently operating with very sound capital levels for the assigned ratings. Fitch also feels liquidity adequately supports the company's ongoing business needs. Fitch's concerns center on Chrysler's ability to navigate through a difficult operating environment in North America, industry trend towards 72-month loans, which increases loss severity, and the highly encumbered nature of CFS' balance sheet, which may limit financial flexibility.

The ratings of the term loans are notched above the IDR reflecting their well secured nature by generally highly liquid automotive finance related assets.

For additional information on Chrysler LLC's ratings , see the alternate Fitch release issued today ('Fitch Initiates 'B ' IDR for Chrysler; Rates $12B Secured Bank Loan 'BB /RR1"), available on the Fitch Ratings web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.