Ford, Ford Credit 'A+' Sr Debt Affirmed by Fitch IBCA

2 September 1998
Ford, Ford Credit 'A+' Sr Debt Affirmed by Fitch IBCA - Fitch IBCA -
    NEW YORK, Sept. 2 -- Ford Motor Co.'s (Ford) 'A+' senior debt
is affirmed by Fitch IBCA.  At June 30, 1998, Ford's automotive debt totaled
$8.2 billion.  Ford Motor Credit's (FMC) 'A+' senior debt rating and 'F1'
commercial paper ratings also are affirmed.  At mid-year 1998, FMC had
outstanding $40.9 billion of commercial paper and $59 billion of long-term
debt.
    Ford's rating reflects the company's improving cash flow generation, ample
liquidity and strong creditor protection, which arise from its solid market
position in the global automotive industry, successful new products, and
tangible success in lowering structural costs.  Further, Ford's product
spending has stabilized following major product overhauls, and capital
efficiency has improved materially.  All of these factors contribute to
company's improved financial flexibility and ability to weather cyclical
fluctuations inherent in automotive markets.
    In mixed market conditions, Ford's automotive operations still achieved
EBITDA of $13.5 billion for the 12 months ended June 30, 1998.  Consequently,
EBITDA interest coverage was a robust 17 times (x), and debt/EBITDA was a low
0.61x.  At mid-year 1998, Ford's automotive cash was $22.3 billion, which
Fitch IBCA regards as an ample downturn cushion and a strategic reserve for
capital opportunities.  The latter could include raising its ownership in Kia
Motors Corp. or acquisitions for its Visteon components operations.
    Ford still faces challenges in its automotive business: lack of pricing
flexibility, global industry overcapacity, and volatile conditions in emerging
markets and keen competition.  These place additional premiums on successful
product development and additional cost takeouts in order to sustain
competitiveness.  Ford has aggressively used leasing as a sales tool, and has
additional exposures in periods of used vehicle price weakness.