Moody's may downgrade Ford

Moody's Investors Service said it has placed under review for possible downgrade the long-term ratings of Ford Motor Co. (Ba1 corporate family/Ba1 long-term/Ba2 trust preferred) and the Baa3 long-term and Prime-3 short-term ratings of Ford Motor Credit Co. for possible downgrade.

Ford's SGL-1 speculative-grade liquidity rating is not included in the review and has been affirmed.

Moody's said the review of Ford's ratings is prompted by the prospects for persistently weak financial metrics caused in part by a severe erosion in the company's North American truck and SUV franchise as consumer preference continues to shift toward smaller, more fuel-efficient vehicles.

As a result of this market shift, which Moody's expects will continue, Ford's performance through September 2005 has weakened and its ability to achieve operating performance and credit metrics that support the Ba1 rating is becoming increasingly uncertain.

The company also remains heavily burdened by excess production capacity and an elevated fixed-cost structure including high medical costs, the company said.

The ratings of The Hertz Corp. (Baa3 senior/Prime-3 short-term) are unaffected by these actions and remain on a review for possible downgrade initiated on Sept. 12.

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