Standard & Poor's, citing fears the ailing thrift may not be sold in its entirety, cut the preferred-stock rating on Washington Mutual Inc. further into junk territory, while also slashing its junk-level counterparty credit rating five notches closer to default status.

The moves mark the latest blow against Wamu, which is being courted by a number of potential suitors to help it recover from a slew of troubles related to bad bets on mortgages. The mortgage lender is considering all options, from a straightforward sale to raising new capital to a government-assisted takeover, but investors have grown increasingly nervous as the company has yet to announce any major moves.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.