Ford, Ford Cr `A+' Rtgs Affd By Fitch IBCA On Major Actions
17 April 2000
Ford, Ford Cr `A+' Rtgs Affd By Fitch IBCA On Major Actions
NEW YORK--April 14, 2000--Ford Motor Company's (`Ford') `A+' senior debt and Ford Motor Credit's (`FMCC') `A+' senior debt and `F1' commercial paper ratings for all issuing entities are affirmed by Fitch IBCA. Hertz Corporation's `F1' commercial paper rating is also affirmed. Affirmations follow Ford's announcement of its intention to return $10 billion of its cash to Ford shareholders and to give Visteon Corporation (`Visteon') its independence. Ford expects to complete the cash distribution in mid-2000, and the Visteon spin-off early in the second half of 2000.Fitch IBCA views the Visteon spin-off as neutral-to- positive for Ford Motor and as positive for Visteon. On a stand-alone basis, Visteon is one of the world's largest automotive suppliers, and will be well positioned to compete more effectively for both Ford and non-Ford business. Ford Motor should benefit from Visteon's leaner stand-alone cost structure, and its ability to participate fully in the proposed automotive purchasing exchange of which Ford Motor will be a member.
The $10 billion distribution to shareholders appears reasonable against Ford's year-end 1999 balance sheet cash and equivalents portfolio of $23.6 billion. Fitch IBCA had viewed this cash hoard as a reserve for both downturn planning and for strategic opportunities. Even before considering the net cash generated from a strong sales year in 2000, as well as funding the Land Rover acquisition, remaining cash should be more than sufficient to fund the product program during a moderate automotive recession. Ford's $9 billion overfunded pension plan also removes potential other claims on cash flow.
The Hertz rating reflects the company's strong industry positions in the car and equipment rental businesses, solid operating performance, and improving capitalization. At year-end 1999, Ford and its affiliates controlled 94.5% of Hertz' voting shares.