DCR Assigns 'D-1' Commercial Paper Rating to Ford Credit Europe plc
30 January 1998
DCR Assigns 'D-1' Commercial Paper Rating to Ford Credit Europe plc
CHICAGO, Jan. 30 -- Duff & Phelps Credit Rating Co. (DCR) has
assigned a rating of 'D-1' (D-One) to Ford Credit Europe plc's commercial
paper. Ford Credit Europe has a formal support agreement in place with Ford
Motor Company. As of January 23, 1998, Ford Credit Europe plc had short-term
debt (excluding current portion of long-term debt) outstanding totaling $5.8
billion.
The ratings reflect DCR's view on Ford Motor Company combined with Ford
Credit Europe's solid asset quality and profitability measures. In addition,
Ford Credit Europe has adequate liquidity and backup coverage for the
commercial paper program. Ford Motor Company has an agreement to maintain a
minimum ownership in Ford Credit Europe (not less than 75 percent of the
issued share capital of Ford Motor Credit Europe plc through December 31,
1999). Ford Motor Company has also agreed, during that period, that it will
maintain Ford Credit Europe plc's net worth at not less than $500 million.
Ford Credit Europe plc's primary business is to support the sale of Ford
vehicles in Europe through the Ford Dealer network. A variety of retail
leasing and wholesale finance plans are provided in all countries in which the
Company and its subsidiaries operate. Operating and finance leases are
provided to individual, corporate and other institutional customers, covering
individual leases and large and small fleets. In 1996, Ford Credit Europe
financed 492,000 new Ford vehicles, representing 29 percent of new cars and
trucks sold by Ford dealers in 16 European countries in which Ford Credit
Europe operates. During that period, Ford Credit Europe also provided retail
financing for 229,000 used vehicles and wholesale financing for 89 percent of
Ford sales in these countries.
In 1996, Ford Credit Europe plc recorded a profit before taxes of $344
million which is $28 million lower than the record profits achieved in
1995. The reduction was due to intensified competition and higher-than-
expected retail credit losses in Britain. Profit before taxes for the nine
month period ended September 30, 1997, totaled $311 million. Asset quality
measures are good with credit losses as a percent receivables at less than
1.00. Leverage as measured by debt-to-equity was in the 6.50-7.00:1 range the
last two fiscal years. Debt-to-equity at September 30, 1997, was 6.9:1. At
September 30, 1997, there were approximately $4.6 billion of contractually
committed facilities available for Ford Credit Europe's use. In addition $615
million of Ford Motor lines may be used by Ford Credit Europe at Ford Motors
option.
SOURCE Ford Credit Europe plc