Standard & Poor’s Cuts GM, Ford Credit Ratings

General Motors Corp. and Ford Motor Co., the two biggest U.S. automakers, had their credit ratings reduced to junk-bond status Thursday by Standard & Poor's.

S&P said in separate press releases that it cut GM two levels, to BB from BBB- and Ford by one level, to BB+ from BBB-.

Both automakers make light and medium-duty trucks and are served by many companies in the trucking and logistics business. GM is the No. 1 U.S. automaker and Ford is No. 2.

S&P said competition could intensify in full-size pickup trucks, GM's only other major source of automotive earnings.

It said that Ford faces the prospect that its overall sport utility vehicle business will not be able to generate the same profitability it has enjoyed historically.

The rating company said it was concerned the automakers would be unable to address their “competitive disadvantages.”

It reported the two are losing market share and struggling to control rising retirement and health-care costs.

Ford and GM are the biggest companies to have their credit lowered to high-yield, high-risk ratings, exceeding WorldCom Inc. in 2002 and dealing a blow to the insurers and pension funds that hold their debt, Bloomberg reported.