Ford Motor Company’s corporate turnaround has hit a snag. Moody’s Investors Service has downgraded the company’s bonds to a ‘junk’ status. Moody’s made the announcement late Monday after the stock market closed.

The immediate impact of the credit downgrade is similar to that of normal purchaser. A ‘junk’ rating could make it more costly for the company to borrow money, which could impact its turnaround effort.

“Ford remains very confident in our plan and progress,” Ford said in a statement. “Our underlying business is strong, our balance sheet is solid and we have plenty of liquidity to invest in our compelling strategy for the future. As Moody’s notes, we are already addressing two of its primary concerns: operating inefficiency and our China business. The agency also calls out our ‘sound’ balance sheet and liquidity position, and expects our global redesign and new products to contribute to improvement in earnings, margins and cash generation.”

Moody’s says the credit downgrade reflects Ford’s “considerable operating and market challenges.” Weak earnings and cash generation also weighed on the decision to downgrade the automaker’s credit.

“Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers,” Moody’s added.

Ford’s planned turnaround has a total estimated cost of $11 billion, of which $7 billion will be in the form of cash. The credit downgrading also stems from the fact Ford’s weak position has come at a time when the auto industry as a whole has been fairly healthy. Moody’s notes that if the auto industry undergoes an anticipated downturn, the impacts will likely be amplified for Ford.