ResCap Bonds Rise After Report Ally Won’t Put Unit in Bankruptcy

Residential Capital LLC’s bonds rose after a report that Ally Financial Inc. (ALLY) won’t put the mortgage- lending unit into bankruptcy.

ResCap’s $2.12 billion of 9.625 percent notes due in May 2015 climbed 5.8 cents to 76.3 cents on the dollar at 10:02 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That’s the highest level since Nov. 8, before Ally was reported to have hired advisers to weigh options for the unit.

Ally, the former financing arm of automaker General Motors Corp., won’t put ResCap into bankruptcy because of the risk of lawsuits by creditors, the New York Post reported today, citing sources it didn’t identify. Gina Proia, a spokeswoman for Detroit-based Ally, didn’t immediately respond to a phone call and an e-mail seeking comment.

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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