S&P: Chrysler Rating Would Resemble GM

Associated Press 05.08.07, 3:03 PM ET - - A separate Chrysler Group spun off or sold by DaimlerChrysler AG would likely have a credit rating similar to that of U.S. peers General Motors Corp. and Ford Motor Co., Standard & Poor's Ratings Services said Tuesday.

"It's quite comparable ... but Chrysler is less diversified than GM and Ford," S&P's credit analyst Maria Bissinger told reporters in Frankfurt, without commenting further.

S&P currently gives both GM and Ford a long-term rating of B, with a negative outlook. Their short-term ratings are both at B-3. It gives DaimlerChrysler a better rating, BBB for the long term with a stable outlook, and a short-term rating of A-2.

As for the parent company excluding Chrysler, Bissinger said that the "business profile would likely improve if the weakest link is removed."

She noted that it remains to be seen how a split-up of the group's financial services division - a key contributor to earnings, and a sector to which Chrysler contributes - would be achieved.

DaimlerChrysler Chairman Dieter Zetsche announced in February that the company was considering all options for the struggling Chrysler unit and has been holding talks with likely bidders.

Chrysler lost $1.5 billion in 2006 and is undergoing a recovery plan that will cut 13,000 jobs in Canada and the U.S. and pare back production.

Several industry analysts view Canadian auto parts supplier Magna International Inc. as the front-runner in bidding to grab at least a significant stake in Chrysler. Aurora, Ontario-based Magna has acknowledged its interest.

Among other companies reportedly interested in Chrysler are private equity firms Cerberus Capital Management LLC and a consortium of investors led by Blackstone Group, although neither has confirmed its interest.

Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, has made a $4.5 billion bid.

Shares of DaimlerChrysler fell 0.8 percent at 59.77 euros ($81.38).