Moody's cuts Ford, Hertz

Moody's Investors Service said it lowered the long-term debt ratings of Ford Motor Co. to Baa3 from Baa1, and of Ford Motor Credit Co. to Baa2 from A3. Ford Credit's prime-2 short-term rating is affirmed.

Moody's also lowered Hertz Corp.'s long-term rating to Baa3 from Baa2 and its short-term rating to prime-3 from Prime-2. The outlook for Ford and Ford Credit is negative; the outlook for Hertz is developing.

The downgrade of Ford's ratings recognizes that the company will fall significantly short of the benchmarks identified by Moody's during October 2004.

These benchmarks included achieving $4 billion in 2006 automotive profit before tax, stabilizing North American market share above 19.5% and remaining on track for delivering more robust credit metrics in 2006 and beyond.

Moody's said a number of market and operational challenges have outpaced the progress that Ford has continued to make since the implementation of its 2002 revitalization plan.

As result, Moody's said 2006 performance will be well below expectations, and the pace of recovery in the company's credit metrics will be delayed.

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