US:S&P cuts Ford, Ford Credit deeper into junk status
S&P cuts Ford, Ford Credit deeper into junk status
NEW YORK -- Standard & Poor's on Wednesday cut its rating on Ford Motor Co. and its finance arm further into junk status, saying it expects 2006 to be a more difficult year for the No. 2 U.S. automaker than previously expected.
Ford, in the midst of a turnaround plan, is closing 14 plants and cutting up to 30,000 factory jobs as it tries to stem North American losses.
S&P said it is concerned about weakness in the mid-sized SUV segment after Ford's Explorer sales fell 27.1 percent in the first five months of the year. The Explorer accounts for about 9 percent of Ford brand sales, S&P said.
Sales of full-sized pickups are another concern because of persistently high gasoline prices and competition from new models from rivals General Motors and Toyota Motor Corp., S&P said.
S&P cut its corporate credit ratings on Ford and Ford Motor Credit Co. to "B-plus," four steps below investment grade, from "BB-minus." The outlook is negative, meaning another cut is likely over the next two years.
Ford's 7.45 percent bonds due in 2031 fell to 70.375 cents on the dollar, down from 70.438 cents on Tuesday, according to MarketAxess.
Five-year credit default swaps on Ford were unchanged after the downgrade at around 970 basis points, or $970,000 per year to insure $10 million in debt. Swaps of Ford's finance unit, Ford Motor Credit Co., were also unchanged at around 525 basis points.
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.....