S&P cuts Ford to junk

Standard & Poor's said it lowered its long- and short-term corporate credit ratings on Ford Motor Co., Ford Motor Credit Co. and all related entities - except those of Hertz Corp. - to BB+/B-1 from BBB-/A-3. The outlook is negative.

The ratings on Hertz (BBB-/Watch Developing/A-3) remain on CreditWatch, where they were placed on April 21 following Ford's disclosure that it was evaluating strategic options for Hertz, including its potential sale.

S&P said the downgrade to non-investment-grade reflects skepticism about whether management's strategies will be sufficient to counteract mounting competitive challenges.

Of greatest immediate concern is that Ford faces the prospect that its overall sport utility vehicle business will not be able to generate the profitability it has enjoyed historically, according to S&P. Ford's financial performance has been heavily dependent on the earnings of its SUVs.

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