S&P keeps Ford on positive watch

Standard & Poor's said the B long-term corporate credit ratings of Ford Motor Co. and Ford Motor Credit Co. remain on CreditWatch with positive implications following Ford's report of a narrower third-quarter loss compared to that of a year ago. The agency expects to resolve the CreditWatch around mid-November and said the most likely outcome is an affirmation of the B rating with an outlook to be determined.

The ratings were placed on CreditWatch on Sept. 26 based on S&P's belief that Ford would achieve a deal similar to the tentative new labor contract General Motors Corp. reached with the United Auto Workers. Ford and the UAW subsequently reached their own four-year agreement. The agency said it views the new contract as favorable to Ford compared with past agreements, and S&P believes the contract will support the company's turnaround plan in North America.

Still, the agency said it remains concerned about the economic outlook for 2008, even as the company is making progress on its turnaround plan. Much of the labor contract's health care savings will not begin to accrue to Ford until 2010, and this is a key factor in the review.

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