NEW YORK -- Moody's Investors Service on Monday said it may cut its ratings on General Motors deeper into junk territory, citing the bankruptcy filing by GM's largest supplier Delphi Corp.
GM, which has been struggling to reverse massive first-half losses, faces the risk of supply disruptions and may have to absorb some of Delphi's pension costs under an agreement formed when Delphi was spun off from GM in 1999.
The automaker is battling its own soaring employee health care costs, which it blames for hurting its ability to compete with Asian rivals. GM's North American operations posted a $2.5 billion loss in the first half of the year and more losses are expected as soaring gasoline prices curb demand for its high-profit SUVs.
Moody's said it may cut GM's long-term senior unsecured rating, now "Ba2," the second-highest junk rating. It also may cut its senior unsecured rating on GM's finance arm, General Motors Acceptance Corp., now at "Ba1," the highest junk rating. GM and its financial unit had $284 billion of consolidated debt at the end of June.