Moody's: Ford outlook negative

Moody's Investors Service said it affirmed the B3 corporate family and probability-of-default ratings of Ford Motor Co. but changed the outlook to negative from stable. The speculative-grade liquidity rating remains SGL-1.

The outlook for Ford Credit Co. has also been changed to negative from stable.

The agency said the negative outlook reflects the increasingly challenging environment faced by Ford and the other domestic auto manufacturers as the outlook for U.S. vehicle demand falls and as high fuel costs drive U.S. consumers away from light trucks and sport utility vehicles. As a result of these eroding market fundamentals, Ford announced that its automotive performance for 2008 will be worse than that of 2007 in which it had a pre-tax loss of $1.8 billion and the company is unlikely to achieve break-even performance during 2009.

A key factor supporting Ford's B3 corporate family rating and SGL-1 liquidity rating is the ample size of its liquidity position relative to the cash requirements it will likely face during the coming 12 months, Moody's said. However, the agency said Ford will continue to face a sizable cash burn through 2009 and the current liquidity cushion will continue to narrow.

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