S&P puts U.S. automakers on watch

Standard & Poor's said it placed its corporate credit ratings on General Motors Corp., Ford Motor Co. and Chrysler LLC on CreditWatch with negative implications. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC.

The agency said the CreditWatch placement reflects the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions - largely as a result of high gasoline prices. S&P believes all three companies currently have ample liquidity for at least the rest of 2008, but the agency said deteriorating industry fundamentals could reduce liquidity to undesirable levels by the second half of 2009.

The companies' difficulty in anticipating the pace of market deterioration was reflected Friday in Ford's announcement that it expects to use an even larger amount of cash this year and next than it announced previously, its second negative guidance revision in a month, S&P said.

Although GM and Chrysler have not publicly detailed their expectations for cash use, all of the factors behind Ford's weaker guidance also apply to the other U.S.-based automakers, the agency noted.

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