S&P downgrades Ford and Ford Motor Credit
The following is a summary of a UBS full-length report on this topic, dated January 6, 2005.
S&P downgrades Ford and FMC:
S&P downgraded Ford (F) and Ford Motor Credit (FMC) to BB- from BB+ reflecting increased skepticism about F's ability to turn around the performance of its North American operations. S&P has negative outlooks on F and FMC.
Substantial 2005 market share erosion; mix deteriorated:
Substantial market share erosion took place at F during 2005. Inaddition, the company experienced deterioration in its product mix, primarily due to sharp declines in sales of its midsize and large SUVs.
Restructuring announcement expected:
While F is expected to announce details of its turnaround plan on January 23rd that is expected to aim at reducing capacity, S&P believes that the benefits of these efforts could be lost if F is not able to stabilize its market share without more price discounting.
Ford: Underperform; Sell Ford bonds maturing later than 2010:
We maintain an Underperform opinion on F, rate F "BB", and maintain a "Deteriorating" credit trend. We recommend that investors sell F bonds maturing later than 2010. From a relative value perspective, we prefer FMC bonds that we cover maturing not later than 2010, that we consider to be fairly valued.
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