Fitch Cuts Ford Credit Rating to Junk
By Alan Fein
New York - Ford and Ford Motor Credit both had their credit rating cut
to junk status Monday by Fitch Ratings. The auto manufacturer's
finance arm's $124 billion in debt will no longer qualify for the
Lehman Brothers investment grade bond index following the down
grade by Fitch Ratings.
The Lehman Brothers index dropped Ford following Fitch Ratings move
to lower Ford Motor Credit to junk status, which was the second
of three rating services to cut Ford's credit rating to junk.
Lehman's Index automatically drops a company once two of the
three rating services cuts a businesses credit rating.
Standard & Poor's and Moodys had already lowered Ford Motor Co.
(NYSE: F) below investment grade, the parent company of Ford
Motor Credit.
Fitch cited declining market share, a drop in SUV sales as well
as high pension and healthcare costs. The rating service also
noted that commodity prices were squeezing the automaker as
well as constraints on the pace of restructuring.
Fitch now rates both Ford and Ford Motor Credit at its highest
junk rating, BB+, with a negative outlook.
Even though Fitch Ratings lowered Ford Motor Credit's rating,
the market in Ford bonds only declined slightly as Wall Street
had already anticipated the rating cut.
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