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Moody's Downgrades Ford's Credit to Just Above 'Junk' Status

Moody's Downgrades Ford's Credit to Just Above 'Junk' Status

Moody’s Investment Service has downgraded Ford Motor Company’s credit rating to just above junk status. The move comes six years after the automaker managed a return to investment grade credit ratings from the major credit rating agencies.

Moody’s formally announced it was downgrading Ford’s credit from Baa3 to Baa2 earlier this week. The move comes as little surprise as the firm announced guidance earlier this year giving Ford a negative outlook; generally a leading indicator on an impending credit downgrade.

“The downgrade of Ford’s rating reflects the erosion in the company’s global business position and the challenges it will face implementing its Fitness Redesign program,” Moody’s stated in its rationale for the downgrade.

Ford recently announced a $11 billion restructuring plan, focused on reducing costs and aligning its product portfolio to consumer needs. The restructuring plan is expected to take three to five years to complete, also contributing to the credit downgrade.

Moody’s states it is plausible Ford will be downgraded to again to ‘junk’ bond status if the automaker cannot showcase significant achievements by mid-2019 with regards to their restructuring plan. Such a downgrade would place Ford in ‘junk’ status for the first time following the company’s 2009 mortgage of the entire company to weather the financial crisis.





 

About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.
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  1. Tone
    Wow. I had no idea the markets had this much concern about the medium-term viability of Ford. My own take: GM had done a better job in terms of technology to have lots of options, whether the market goes full electric or continues to embrace 400 hp, 5000 lb pickup trucks. Ford (right now) really needs NA to keep buying F150s ... if we don't, the party is over.
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