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&P affirms Ford ratings but sees lower recoveries

Reuters

NEW YORK -- Standard & Poor's today affirmed its loan and recovery ratings on Ford Motor Co. after the automaker increased the size of a secured revolving credit line and convertible bond sale.

Recovery ratings are still in the "2" category, which means investors would recover about 80 to 100 percent of their principal in a default, S&P said. However, recoveries will now likely be at the lower end of that range, S&P said.

Ford in November said it planned to line up borrowings of about $18 billion to help pay for its restructuring and prepare for a possible recession. Ford said it was pledging collateral for loans, which reduces the assets available to unsecured lenders in a default.

Last week, Ford increased the size of the financing to as much as $23 billion. A revolving credit line was boosted to between $10.5 billion and $11.5 billion, up from $8 billion, and a convertible bond sale was increased to $4.5 billion from $3 billion. The size of a $7 billion term loan did not change.

S&P affirmed Ford's bank loan rating at "B," five steps below investment grade, and the convertible debt rating at "CCC-plus," seven steps below investment grade.

Fitch Ratings last week cut its ratings on Ford's senior unsecured debt deeper into junk territory, citing the increase in new secured and convertible debt. Ford's senior unsecured rating was lowered to "B-minus," six steps below investment grade, from "B."

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Stacy94PGT
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....