EU:Ford Credit sees no changes after rating warning - Ford Forums

Stacy94PGT · 04-26-2005, 06:16

Ford Credit sees no changes after rating warning

Reuters

AMSTERDAM -- Ford Motor Credit Co., the finance arm of Ford Motor Co., has no plans to change operations despite a recent warning its ratings may be cut to junk status, CFO Dave Cosper said on Tuesday.

Cosper told Reuters on the sidelines of an investor conference in Amsterdam that Ford Motor Credit had not made any changes since Standard and Poor's moved its outlook for the company to negative earlier this month in the wake of a hefty profit warning.

S&P currently rates Ford at BBB-, just one notch above junk status. The company had consolidated debt of $173 billion at the the end of 2004, the ratings agency said.

"We do plan very conservatively. We have a lot of liquidity and we're not doing anything different in the business with regard to origination," Cosper said. "We could stay out of the market for six to nine months just with cash (on hand)," he said.

If S&P were to cut Ford's rating to junk the automaker's borrowing costs would rise and billions of dollars of Ford bonds would hit the high-yield corporate bond market, which has a smaller investor base.

"We're still investment grade ... and my intent is to stay there," Cosper told the conference.

Ford Motor Credit, one of the world's largest automotive finance companies, plans to borrow up to $25 billion in 2005 and has already raised $12 billion of this target, Cosper said.

Securitization will account for $10 billion to $15 billion of this target.

Cosper told the conference that while Ford Motor Co. could buy back bonds, Ford Motor Credit Co. would not do so. "I don't think you're going to see Ford Credit buying back debt," he said.

Ann Marie Petach, treasurer at Ford, said last week that the auto company might buy back debt in the market. Cosper said this would be on an opportunistic basis, adding that spreads on Ford bonds made this an attractive option.

Ford and rival General Motors have both seen their ratings slashed close to junk status as they lose market share to foreign competition and struggle with rising employee health costs.

While S&P's rating of Ford is on the brink of "junk" status for both the auto and the finance operations, Moody's Investors Service and Fitch Ratings are higher on the scale.

Moody's rates Ford Motor Co. Baa1 and Ford Motor Credit Co. A3, although it is reviewing both ratings for possible downgrade. Fitch rates both entities at BBB+ with a negative outlook.