NEW YORK -- Standard & Poor's on Monday said it may still cut its ratings on General Motors deeper into junk territory, citing concerns that the automaker's poor financial performance will hamper its turnaround efforts.
GM, the world's largest automaker, on Monday reported a $1.6 billion third-quarter loss, much worse than Wall Street had expected, as high gasoline prices curbed sales of SUVs and as increased costs eroded profits.
S&P currently rates GM "BB-minus," the third-highest junk rating. S&P also said that its "BB" rating on GM's finance arm, General Motors Acceptance Corp., remains on "Creditwatch Developing," meaning ratings may be raised, lowered or affirmed.
Earlier on Monday, GM said it was exploring the sale of a controlling interest in GMAC to restore its investment-grade rating and lower its funding costs. The automaker also said it had reached a tentative agreement with the United Auto Workers union to cut health care costs by about $3 billion annually.
An investment-grade rating for GMAC is feasible "if GM sells a majority stake to a highly rated financial institution with a long-range strategic commitment to the automotive finance sector," S&P said.
Earlier on Monday, Fitch Ratings said it may raise, lower or affirm GMAC's ratings, citing the potential, partial sale by GM. Fitch rates GMAC "BB," the second-highest junk rating. GM's ratings were not affected.