S&P keeps Ford on negative watch

Standard & Poor's said that ratings on Ford Motor Co. and all related entities remain on CreditWatch with negative implications, where they were placed on Oct. 3. Hertz Corp.'s ratings had already been placed on CreditWatch negative on Sept. 13, pending completion of Ford's plan to divest it.

Ratings on watch include Ford Motor Co., Ford Motor Credit Co. and FCE Bank plc's BB+ corporate credit rating; Ford Motor Co. of Australia Ltd., Ford Credit Australia Ltd. and Primus Financial Services Ltd.'s BB+ corporate credit rating and Hertz Corp.'s BBB- corporate credit rating.

The CreditWatch listing reflects concerns about the automaker's ability to turn around its troubled North American automotive operations given the recent precipitous deterioration in Ford's product mix in North America, the ongoing decline in its market share in the important SUV segment, the sales and pricing outlook for Ford's products and the potential inadequacy of Ford's strategies for improving its cost position.

S&P expects Ford to eventually reach an agreement with the United Auto Workers union that could result in a substantial reduction of Ford's burdensome health care costs in the long term.

S&P said the remainder of Ford's automotive operations, as well as Ford Credit, are performing roughly in line with expectations and so are not central factors in this review. However, the performance of these units is not sufficient to offset the problems the company faces in its North American operations, the agency said.

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