PSA Bank’s Rating Cut to Junk-Bond Level

Standard & Poor's Ratings Services has lowered its rating of PSA Peugeot Citroen's auto-lending arm, Banque PSA Finance, by one step to BB+, one notch below investment grade.

S&P also cut PSA's rating by one step to BB-, three notches below investment grade. The ratings agency says the carmaker's cash outflow is likely to continue until late 2014.

S&P says it downgraded Banque PSA because its business is dependent on its parent company.

The French government agreed in October to guarantee as much as €7 billion in loans to Banque PSA to preserve the unit's investment-grade credit rating. That rating allows the bank to provide affordable loans to PSA's customers and dealers.

The automaker says Banque PSA will still be able to borrow at reasonable rates because of the loan guarantees.