Moody's Investors Service Inc said itaffirmed the ratings on 12 billion dlrs of debt of Chrysler
Corp and its unit, Chrysler Financial Corp.
    The agency cited potential benefits of Chrysler's proposed
acquisition of American Motors Corp &lt;AMO> to its business
position and marketing and distribution capabilities.
    Moody's said it believes the acquisition will be carried
out substantially as currently structured. Affirmed were
Chrysler's Baa-1 senior debt and Chrysler Financial's Baa-1
senior debt, Baa-2 senior subordinated debt and Baa-3 junior
subordinated debt.
    Also affirmed were the Prime-2 commercial paper of
Chrysler's finance arm and the Baa-1 guaranteed Eurobonds of
Chrysler Credit Canada Ltd.
    Moody's pointed out the purchase of AMC would undercut some
of the recent progress Chrysler has made in improving its
financial condition and cost structure. The agency noted that
Chrysler would assume substantial debt and unfunded pension
liabilities, as well as two inefficient production facilities.
    But, Moody's said, the negative effect on Chrysler's
profitability and cash flow would be temporary. Meanwhile,
AMC's B-1 preferred stock remains under Moody's review.
 Reuter
