Standard & Poor's ratings services lowered the long-term and short-term credit ratings on automotive giants General Motors and Ford Motor Company and all their subsidiaries in an action that could affect the corporations' ability to borrow money.

"The two US-based automakers - General Motors Corp. (GM) and Ford Motor Co.- are suffering from long-standing competitive pressures that are increasingly impinging on their financial performance," the credit rating agency said.

The lowering of the ratings reflected the view that "these companies' credit prospects are diminished, notwithstanding their ongoing efforts to enhance product offerings, cut costs, and maintain liquidity and funding flexibility. Both companies' rating outlooks are negative."

One of the important reasons why the two giants have taken a beating is the weakening demand for their gas-guzzling sports utility vehicles (SUVs) in the face of rising gas prices across America. Traditionally SUVs have earned a lot of money for these companies and declining demand in this category is particularly worrisome.

"The downgrades of General Motors Corp. and Ford Motor Co. to speculative grade have brought the year-to-date global tally of fallen angels to 15 compared with 11 for the same period a year ago," the report said.

The report, which is titled "Fallen Angels Hit New Record," said that the volume of debt affected has hit a new record high. The debt affected by these two additions is more than five times as large as the next largest fallen angel recorded historically.

GM has long-term debt outstanding worth $291.8 billion and was lowered to 'BB' from 'BBB-' because of "concerns that management's strategies might be ineffective in addressing GM's competitive disadvantages".

Ford Motor Co. with long-term debt outstanding worth $161.3 billion was lowered to 'BB+' from 'BBB-' because of "skepticism about whether management's strategies will be sufficient to counteract mounting competitive challenges."

Both GM and Ford were predictably unhappy with the downgrades and said they had adequate cash and liquidity. In the backdrop of the downgrades GM's shares fell $1.94, or 5.9 percent, to close at $30.86, while Ford's shares reduced by 46 cents, or 4.5 percent, to $9.70 on the New York Stock Exchange Thursday.