Moody's downgrades GM, Chrysler, backs Ford rating
Moody's downgrades GM, Chrysler ahead of Washington meeting, backs ratings for Ford Motor
Wednesday December 3, 2008, 8:28 pm EST
NEW YORK (AP) -- Credit ratings agency Moody's Investors Service on Wednesday downgraded its ratings for General Motors Corp. and Chrysler LLC, sending them further into non-investment, or "junk," status as the automakers' seek bailout funds from Washington.
Moody's also affirmed its ratings for Ford Motor Co., but said its outlook for Ford -- and the other two automakers -- is "negative," implying further downgrades are possible.
For General Motors, Moody's said it lowered its ratings to "Ca" from "Caa2," citing the increased probability of a balance-sheet restructuring that would result in a loss for current debtholders. About $43 billion of debt is affected.
Moody's also lowered its ratings for privately held Chrysler to "Ca" from "Caa2," affecting about $9 billion in debt. The ratings agency noted Chrysler is highly dependent on truck and SUV segments, which have seen slumping demand as consumers shift to smaller vehicles.
Chrysler reported Tuesday its U.S. sales in November plunged more than 47 percent, worse than the industry average of 37 percent.
A lower credit rating implies a company is less likely to repay its debt and usually means it will cost the company more to borrow money.
Ford's rating of "Caa1" was affirmed by Moody's, affecting $26 billion in debt.
The automakers and their union are trying to sell a skeptical Congress on a $34 billion aid plan, promising labor concessions and restructuring in advance of a second round of hearings.
Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen.
Ford wants a $9 billion "standby line of credit" in case a competitor fails.
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