S&P may cut GM, Ford deeper into junk territory

NEW YORK, Oct 9 (Reuters) - Standard & Poor's said on Thursday it may cut its ratings on General Motors Corp GM.N and Ford Motor Co (F.N), and their finance units, deeper into junk territory on weal global auto sales.

The downgrade watch "reflects the rapidly weakening state of most global automotive markets, along with capital market conditions that will remain a serious challenge for the foreseeable future," S&P analyst Robert Schulz said in a release.

Both GM and Ford have adequate liquidity for at least the rest of 2008, based on cash balances and available bank facilities, but the accelerating deterioration in industry fundamentals will be a serious challenge to liquidity during 2009, S&P added.

S&P rates GM, Ford and both of their finance units "B-minus," six steps below investment grade. (Reporting by Karen Brettell; Editing by James Dalgleish)