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Old 06-22-2005, 06:18   #1 (permalink)
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UK:S&P says Ford ratings may fall further in future

S&P says Ford ratings may fall further in future

Automotive News

LONDON -- Standard & Poor's said on Wednesday it would take no immediate action on Ford Motor Co.'s BB+ credit rating after Tuesday's profit warning, but said it was now more likely the rating could fall in the future.

"We believe there is now an increased likelihood that the ratings ... will ultimately be downgraded further," the ratings agency said in a statement.

S&P rates Ford BB+, the highest "junk" rating, with a negative outlook.

Ford on Tuesday cut full-year earnings guidance to $1 to $1.25 per share from a previous range of $1.25 to $1.50.

"We interpret the current guidance to mean that Ford's North American automotive operations will generate a substantial loss this year, reflecting its vulnerability to cost, market share, and pricing pressures, even though overall industry demand remains robust," S&P said.

The agency said it was particularly concerned about weak sales in the shrinking mid- and large-sized sport-utility vehicles segments.

However, S&P said Ford had substantial liquidity, which would be enhanced if cash could be raised from car rental subsidiary Hertz Corp., which is planning an initial public offering.

S&P cut Ford's rating to "junk" in May, but Moody's Investors Service and Fitch Ratings still have investment-grade ratings on the company.

Moody's rates Ford at Baa3, one notch above "junk" status, while Fitch is one notch higher at BBB.
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