NEW YORK—Moody's Investors Service is reviewing its ratings on Chrysler LLC for a possible downgrade and keeping a negative outlook on Ford Motor Co., citing the market shift away from trucks and SUVs.
Moody's said late Tuesday it is reviewing Chrysler's Corporate Family Rating of B3, its senior secured first lien term loan rating of B1 and its senior secured second lien term loan rating of Caa1.
All three ratings are non-investment, or "junk," grade.
The credit ratings agency is also maintaining its negative outlook on Ford's B3 Corporate Family Rating and Ford Motor Credit Co.'s B1 senior unsecured rating.
A negative outlook implies a 40 percent chance that a rating will be downgraded in the next 18 months, according to Moody's.
The agency cited the deteriorating business outlook for U.S. automakers amid a weakening economy, record-high fuel prices and a shift in demand away from trucks and sport utility vehicles toward cars and crossovers.
Moody's said Chrysler's biggest challenge is building enough profitability in its car and crossover offerings to offset the shift in demand.
Ford, too, is vulnerable given the flight from its trucks and SUVs, its high rate of cash burn and the likelihood that it will not be profitable through 2009, according to Moody's
On Tuesday, Fitch ratings downgraded General Motors Corp.'s non-investment grade issuer default rating to "B-" from "B" with a negative outlook.
