S&P cuts GM ratings to "CCC+"

S&P said the outlook is "negative," meaning another downgrade is likely.

GM on Friday reported a $2.5 billion loss in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn't get government aid.

Also Friday, S&P cut the long-term counterparty credit rating of GMAC LLC, the Detroit-based automaker's financing arm, two levels to "CCC" from "B-." It also lowered the same rating on GMAC's mortgage-lending subsidiary, Residential Capital LLC, two grades to "CCC-" from "CCC+."

S&P said it expects the continued cash burn to cut into GM's liquidity over the next few quarters, possibly to levels that would force GM to consider restructuring, if not a bankruptcy protection filing.

"We now believe GM will use much more cash this year than our previous estimate of as much as $16 billion in its global automotive operations," S&P credit analyst Robert Schulz said in a statement.

Meanwhile, S&P backed its ratings for Ford Motor Co. and Ford Motor Credit Co., including their "B-" corporate credit ratings, citing the Dearborn, Mich.-based automaker's weak third-quarter results.

Those ratings remain under review with a negative outlook.

Ford said Friday it lost $129 million in the third quarter as it burned through $7.7 billion in cash and set plans for more job cuts.

GM fell 44 cents, or 9.2 percent, to close at $4.36, while Ford rose 4 cents, or 2 percent, to close at $2.02.