http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=1&u=/nm/20031112/bs_nm/autos_ford_dcDETROIT (Reuters) - Standard & Poor's cut its rating on Ford Motor Co.'s (NYSE:F - news) debt on Wednesday to one notch above "junk," a blow to the giant automaker although financial markets were relieved the action was not worse.
The long-awaited downgrade to "BBB-," the lowest possible investment grade rating, covers some $180 billion of debt, mostly from finance unit Ford Credit, making Ford bonds the most widely held in the investment grade corporate bond market.
"Ford's profitability and cash flow remain poor, and S&P believes that only limited improvement will be achievable over the next few years," S&P analyst Scott Sprinzen said in a statement accompanying the downgrade.
A cut to "junk" status would force many mutual funds to sell their holdings in Ford or prevent them from buying since they are restricted from holdings in companies with a "junk" rating.
Despite the latest downgrade, Ford should have no problem selling its corporate bonds to raise money because its credit ratings remain in the investment-grade area, which the bond market considers to have a low chance of default.