Democratic Underground - GM's ratings cut deeper into junk territory

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NEW YORK, June 20 (Reuters) - Two major rating agencies cut General Motors Corp.'s (GM.N: Quote, Profile, Research) debt rating deeper into junk territory on Tuesday after the automaker said it was offering banks collateral to renew a credit facility.

GM said earlier in the day that it plans to amend and extend a $5.6 billion unsecured revolving credit facility, offering lenders collateral, better pricing and other enhancements in return for extending the maturity of the revolving facility to 2011.

The automaker disclosed earlier this year that access to its credit facility could be threatened because of its restatement of financial results. Rating agencies had placed GM's debt on review for downgrade at the time because of concerns the automaker would have to offer collateral to bank lenders, leaving fewer assets for bondholders in the event of a bankruptcy.

GM, which lost $10.6 billion in 2005, is cutting 30,000 jobs and closing 12 plants as part of a broad restructuring effort. It is also offering early retirement incentives to more than 125,000 factory workers, including about 13,000 at its bankrupt former parts subsidiary, Delphi Corp.

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Moody's Investors Service slashed GM's senior unsecured rating to a deeply speculative "Caa1," seven steps below investment grade, from "B3." The outlook is negative, meaning the rating may be cut again over the next 12 to 18 months.

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