NEW YORK — Standard & Poor's Ratings Services said that it lowered two credit ratings for AmeriCredit Corp., saying the auto finance company faces further deterioration in its loan portfolio.

S&P reduced AmeriCredit’s long-term counterparty credit rating to 'B' from 'B+' and its senior unsecured debt rating to 'B-' from 'B'. The ratings were removed from CreditWatch Negative, where they were placed Oct. 29, 2008. However, the outlook is negative.

"The downgrade reflects our expectation that AmeriCredit's asset quality will continue to deteriorate, particularly given that consumer credit losses generally correlate to unemployment, which we expect to exceed 10 percent in the U.S. by mid-2010," said S&P’s credit analyst Rian M. Pressman.

Credit losses are expected to worsen by depressed recovery rates on repossessed vehicles, S&P said.

Despite AmeriCredit’s troubles it has tightened credit standards, leading to better relative performance for post-March 2008 originations, which comprise approximately one-quarter of its total receivables portfolio.

The auto finance company has also successfully extended its master warehouse credit facility and executed securitization transactions through Deutsche Bank and other market participants. AmeriCredit is currently marketing a TALF-eligible senior-subordinated securitization. This would be an important first step in regaining access to the public asset-backed securities (ABS) markets, S&P said.

The ratings firm said the negative outlook on AmeriCredit reflects the recessionary economic environment, asset quality, liquidity, and profitability could continue to weaken to a level inconsistent with the current rating. It also reflects AmeriCredit's dependence on securitization transactions for long-term funding given the continued fragility of the ABS markets.

The stabilization of AmeriCredit's long-term funding profile (either through its demonstrated ability to access the public ABS markets consistently or secure other long-term funding arrangements) may result in a more favorable outlook, provided asset quality, profitability, and capital remain acceptable for its rating level. S&P said it may lower the rating if AmeriCredit cannot stabilize its long-term funding profile, or if asset quality, liquidity, and profitability deteriorate appreciably beyond its current expectations.