Chrysler gets junk-bond credit ratings

Chrysler, the fourth-largest automaker in North America, received credit ratings that are below investment grade from both Moody's Investors Service and Standard & Poor's for its automotive division and finance unit, Bloomberg News reported today.

Moody's rates the automotive division at B3, six levels below investment grade, and the financial services unit was ranked two levels higher at B1. S&P ranks both units at B, or five levels less than investment grade, Bloomberg said.

The automotive division of Auburn Hills, Michigan-based Chrysler is seeking $12 billion of high-yield loans and the finance unit wants $8 billion to help fund their purchase by Cerberus Capital Management LP. Banks led by JPMorgan Chase & Co. held meetings with potential lenders on June 28 to sell the loans, according to investors who may buy the debt.

The finance unit wants a $4 billion term loan, a $2 billion revolving credit and a $2 billion second-lien loan. The second- lien loan will rank behind the $4 billion term loan and revolving credit for repayment in the event of a bankruptcy.