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DCR Reaffirms Ford, Ford Motor Credit Debt Ratings

29 January 1999

DCR Reaffirms Ford, Ford Motor Credit Debt Ratings

    CHICAGO, Jan. 28 -- Duff & Phelps Credit Rating Co. (DCR) has
reaffirmed the debt and preferred stock ratings of Ford Motor Company (Ford)
and its automotive subsidiary, Ford Motor Credit Company (Ford
Credit) in light of Ford's announced agreement to buy the worldwide passenger
vehicle business of AB Volvo for $6.45 billion.
    The commercial paper ratings for Ford Credit and its European subsidiary,
FCE Bank plc, are D-1+ (D-One-Plus).  The senior debt ratings for Ford and
Ford Credit are 'A+' (Single-A-Plus), and the ratings for Ford's preferred
stock, the Trust Originated Preferred Securities issued by Ford Motor Company
Capital Trust I and Ford Credit's subordinated notes are 'A' (Single-A).
    Ford's financial condition should easily withstand the Volvo acquisition.
The company had amassed $23.8 billion in cash and marketable securities as of
yearend 1998.  DCR's ratings anticipated that Ford would use a substantial
amount of that cash for major strategic investments.  Ford should continue to
generate considerable free cash flow in the current economic environment.
    Volvo's line of cars largely complements Ford's current brand and model
portfolio, especially outside the United States.  While the acquisition may
present some short-term integration challenges, Ford should be able to benefit
longer term from the integration of Volvo's car operations into Ford's global
design, purchasing and production systems.