GM, Chrysler Receive Lower Credit Ratings : Autos: Neither action is expected to significantly worsen the firms’ outlook, but the moves further cloud the companies’ efforts to expand production.

General Motors Corp. and Chrysler Corp. were hit with more bad financial news Tuesday when two leading Wall Street rating agencies lowered the auto makers’ credit ratings.

Moody’s Investors Service said it cut the rating on $75 billion in GM debt, a step that analysts said would raise GM’s cost of borrowing money but not shut it out of the credit markets.

Standard & Poor’s Corp. said it cut its rating on $20 billion in debt of Chrysler and its finance subsidiary. Chrysler’s debt was considered to be of junk bond quality even before Tuesday’s downgrading. Chrysler was also served notice that Moody’s might downgrade its debt, and S&P; said Chrysler’s rating outlook remains negative.

Neither action was expected to significantly worsen the credit picture for the beleaguered auto firms, although it further complicates their efforts to find the money to pay for developing desperately needed new cars and trucks.

Buffeted by the recession and Japanese competition, GM, Chrysler and Ford Motor Co. just finished the domestic industry’s worst financial year ever and are expected to report a combined loss of $4.5 billion for 1991. All three were downgraded by S&P; early last year.

Tuesday’s downgrade was particularly disappointing to GM. Moody’s is the third rating firm to downgrade portions of GM’s debt since the No. 1 auto maker announced a massive retrenchment three weeks ago in hopes of preventing just such actions. Fitch Investors Services and Duff & Phelps acted earlier.

GM said it was “disappointed” by Moody’s action and is “aggressively implementing” its promised cost-cutting program, which will close 21 factories and eliminate 74,000 jobs by 1995. But Moody’s said it believes that GM’s long-term competitive position may continue to weaken.

Analyst William Steele of Dean Witter Reynolds in San Francisco said he believes that the GM downgrade is mainly a reaction to the deteriorating long-term outlook rather than a judgment that GM’s retrenchment was inadequate.

“Even when the industry comes back, GM is not going to make money hand over fist the way it used to,” Steele said.

The action left GM’s debt with a rating of A-2, down from A-1. The auto maker’s debt ratings have been edging down since 1981, the last time it had S&P;’s top rating of AAA.

S&P;’s action on Chrysler lowered the No. 3 auto maker’s debt rating to B plus from BB minus, citing the company’s lack of a cushion if the auto market doesn’t recover or its forthcoming new cars and trucks don’t succeed.

Robert Lutz, president of Chrysler, called it a “relatively minor change that’s of no financial or operational significance. Going from BB minus to B plus doesn’t mean we’re crossing a horrible threshold.

Indeed, such indignities are familiar to Chrysler. S&P; rated Chrysler’s debt at CCC in 1980, when the auto maker was flirting with bankruptcy. This time, S&P; noted, “given Chrysler’s cash reserves, salable assets and access to bank credit, financial flexibility should be adequate at least for 1992.”

GM stock closed down 50 cents at $33 on the New York Stock Exchange on Tuesday, while Chrysler lost 50 cents to close at $13.125.