In a series of moves yesterday affecting more than $21 billion of debt, Standard & Poor's Corp. dropped its rating for Chrysler Corp. and its subsidiary Chrysler Financial Corp. to BB-minus from BB-plus.

In explaining the moves, the rating agency cited concerns about "the rapid depletion of Chrysler's cash reserves resulting from depressed automotive market conditions."

Also affected by the rating drop are Auburn Hills Trust, which is guaranteed by Chrysler, and Chrysler Credit Canada Ltd. Chrysler Financial Corp.'s subordinated debt rating fell to B from BB-minus, and its preferred stock dropped to B from BB-plus.

The ratings of Chrysler Corp. and Auburn Hills Trust may be further downgraded, Standard & Poor's said.

All of the ratings were also placed on Credit Watch. Chrysler Financial Corp. and Chrysler Credit Canada Ltd. were assigned the designation with developing implications, while Chrysler Corp. and Auburn Hills Trust were put on CreditWatch with negative implications.

Chrysler said the Standard & Poor's action is "extremely disappointing, and its timing is surprising."

Arguing that the overall economy appears to be on the rebound and that Chrysler's car and truck sales are finally beginning to show some signs of improvement, a Chrysler statement points out that the company's daily retail selling rate increased 13% from April to May.

"Our minivans continue to dominate the market and, with the exciting new product introductions coming from Chrysler during the next 12 months, the company is well positioned to take advantage of an upturn," the statement says.

"It's no secret that the recession has been a drain on Chrysler, as it has been on virtually all U.S. businesses," Chrysler says. "However, we remain confident that we have the financial resources necessary to continue to support our aggressive new product programs. We believe the worst of it is behind us and that brighter days are ahead for the economy, the auto industry, and for Chrysler."

Standard & Poor's said that if plans by the auto maker to diversify Chrysler Financial Corp.'s ownership base are successful, it could lead to an upgrade.

"In the absence of such restructuring, unless market conditions rebound quickly, further downgrades of the Chrysler and CFC ratings are likely," the agency said.

Yesterday's Market

Traders reported little activity yesterday in either the high-yield or investment-grade sector.

Junk bond prices were reported flat to slightly higher.

"It was a pretty dull session, but given what's been going on in other markets, I think we made a pretty good showing," one trader said, referring to a 23-point drop in the Dow Jones industrial average and losses in the Treasury market.

Investment-grade traders said that market was off about 1/4 point in light trading.

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