Chrysler to repay $7.5B loans by next week

AUBURN HILLS, Mich., May 19 (UPI) -- Chrysler Group LLC has deals pending that could allow it to repay the U.S. and Canadian governments $7.5 billion early next week, sources told The Detroit News.

Originally, Chrysler said it would use $3.5 billion in bank loans and $2.5 billion in high-yield bonds to help finance the loan repayments.

But the bonds have proven popular as "the backdrop theme for the whole industry is positive and so that sort of outweighs the execution risk," said Wilmer Stith, portfolio manager, MTB Intermediate-Term Bond Fund.

As such, Chrysler is now seeing a $2.5 billion loan from a group of banks and has increased the bond offering by $1 billion.

The remainder of payback funds, $1.27 billion would come from Fiat and would increase Fiat's share in Chrysler to 46 percent, the Detroit Free Press reported.

Chrysler owes the U.S. government $5.9 billion and the Canadian government $1.6 billion.

Chrysler declined to comment on the deal but an announcement is expected soon.