Certain Ford Motor, Related Entities Ratings Lowered by S&P
9 October 1997
Certain Ford Motor, Related Entities Ratings Lowered by S&P
NEW YORK, Oct. 9 -- Standard & Poor's today lowered certain
ratings of Ford Motor Co. and various related entities (see list below). The
ratings outlooks are stable (except as noted below).
Ratings of Associates First Capital Corp. (The Associates) and
subsidiaries were affirmed (see separate press release).
Debt outstanding totals approximately $164 billion.
The downgrades reflect the significant deterioration in Ford's financial
flexibility that will result from completion of the just-announced plan to
distribute to shareholders its 80.7% ownership stake in The Associates. This
holding -- which has a current market value of over $17 billion -- had been
viewed by Standard & Poor's as an important store of value. Moreover, the
substantial and growing earnings contribution of The Associates had afforded
Ford some measure of diversity amidst its cyclical automotive business.
Ford's financial flexibility remains considerable, particularly in light
of its large cash position. Also, the company's earnings have been at record
levels in recent quarters, owing in large part to cyclically robust demand
levels, its successful new sport utility and pickup offerings, the benefits of
accelerated cost-cutting efforts, and some success in turning around the
performance of its problematic European and Latin American operations.
OUTLOOK: STABLE
Continued favorable market conditions in North America over the next one
to two years should enable Ford to maintain excellent overall financial
results. Over the longer term, though, Ford's financial flexibility could
well be tested. An eventual cyclical downturn is inevitable. Certain major
Japanese automakers are enjoying a resurgence in their competitiveness in
North America. The secular shift in consumer preferences from conventional
passenger cars to light truck alternatives -- which now account for a highly
disproportionate share of Ford's earnings -- has been slowing, while many new
competing products are being introduced. In addition, the Western European
automotive industry remains beset by excess production capacity, which could
impede Ford's ability to achieve adequate profitability in that market. --
CreditWire
RATINGS LOWERED
Rating
To From
Ford Motor Co.
Corporate credit rating A/Stable/A-1 A+/Stable/A-1
Senior debt A A+
Preferred stock A- A
Bank loan A A+
Ford Motor Co. of Australia Ltd.
Corporate credit rating A-/Stable/- A/Stable/-
Ford Motor Credit Co.
Counterparty credit rating A/Stable/A-1 A+/Stable/A-1
Senior debt A A+
Subordinated debt A- A
Bank loan A A+
Ford Credit Australia Ltd.
Ford Motor Credit Co. of New Zealand Ltd.
Ford Credit Canada Ltd.
USL Capital Corp.
Senior debt** A A+
Ford Holdings Inc.
Senior debt* A A+
Ford Motor Co. Capital Trust I
Preferred stock A- A
Ford Credit Europe PLC
Corporate credit rating A/Stable/A-1 A+/Stable/A-1
Senior debt A A+
Bank loan rating A A+
Ford Capital B.V.
Sr debt* A A+
Hertz Corp.
Corporate credit rating BBB+/Neg/A-2 A-/Neg/A-1
Senior debt BBB+ A-
Subordinated debt BBB BBB+
Commercial paper A-2 A-1
Hertz Finance Centre PLC
Hertz Australia Pty Ltd.
(gtd: Hertz Corp.)
Commercial paper A-2 A-1
RATINGS AFFIRMED
Ratings
Ford Motor Credit Co.
Commercial paper** A-1
Ford Capital B.V.
Ford Motor Co. S.A. de C.V.
Commercial paper* A-1
Ford Credit Europe PLC
Commercial paper A-1
CDs A-1
Associates First Capital Corp.
Counterparty credit rating A+/Stable/A-1
Commercial paper A-1
Associates Corp. of North America
Counterparty credit rating AA-/Stable/A-1+
Senior debt AA-
Subordinated debt A+
Commercial paper A-1+
*Guaranteed by Ford Motor Co.
**Guaranteed by Ford Motor Credit Co.
SOURCE Standard & Poor's CreditWire