Fitch: High Recovery Prospects Above Average For Ford in Default Scenario

CHICAGO & NEW YORK--Sept. 13, 2006--Fitch Ratings has issued a Recovery Rating analysis for Ford Motor Company (Ford). Fitch's recovery analysis provides a framework for expected recoveries in the event of a bankruptcy scenario and is not meant to be a predictor of when or if a default will occur. Recovery Ratings (RR) are assigned to corporate issuers that have an Issuer Default Rating (IDR) of 'B+' or below. Fitch has an IDR of 'B' on Ford with a Negative Outlook.

Fitch estimates unsecured claims total approximately $53 billion and that Ford's enterprise value available to service those claims would be $36 billion -- a recovery rate of 68% for Ford's senior unsecured claimants. This recovery value falls at the high end of the 'RR3' category (50%-70% recovery range), which is above historic recovery averages. Ford's higher recovery rate over GM (RR4 30%-50%) is attributable to a number of factors including Ford's 100% ownership of Ford Motor Credit Co. and the fact that Ford's debt has a large component of subordinated debt, benefiting recoveries of the comparatively smaller unsecured claims.

In a bankruptcy situation, Fitch believes that Ford would not seek to terminate its U.S. hourly or salaried pension plans by offloading them to the Pension Benefit Guaranty Corporation (PBGC). Fitch's analysis assumes that other post employment benefit (OPEB) obligations will be renegotiated as part of any new labor agreement in Chapter 11, thereby not resulting in any claims against the estate. Ford's capital structure also has a heavy weighting of non-debt liabilities, plus other off-balance-sheet liabilities that will result in claims against the bankruptcy estate.

The full recovery analysis report is available on the Fitch Ratings web site at www.fitchratings.com. Fitch will publish an updated recovery analysis on General Motors in the coming weeks.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.