NEW YORK -- Moody's Investors Service on Thursday slashed its ratings on Delphi Corp. deeper into junk territory, saying the auto parts supplier is likely to post more losses as North American automakers cut output.
The outlook is negative, meaning another rating downgrade is likely over the next 12 to 18 months. Ratings downgrades usually raise borrowing costs.
Delphi's near-term profit prospects remain uncertain, given continued pressures on the auto industry, especially Delphi's largest customer, General Motors, Moody's said in a statement.
Delphi said on Monday it would restructure its credit facilities and obtain $2.5 billion to $3 billion in financing.
That will help Delphi pay off debt maturing next year, but the secured bank borrowings will put unsecured debt holders in a lower priority, hurting their recovery prospects in distressed situations, Moody's said.
Moody's cut Delphi's senior implied rating by three notches to "B2," the fifth-highest junk rating, from "Ba2."