Ford Cut to Junk as Moody’s Doubts Hackett’s Turnaround Bid
CEO struggles to win over Wall Street with restructuring plans
Credit rater knocks North American margins, losses in China
By Molly Smith and Keith Naughton, Bloomberg
September 10, 2019
Ford Motor Co. was dealt a blow by Moody’s Investors Service, which cut the carmaker’s credit rating to junk on doubts that a turnaround plan by Chief Executive Officer Jim Hackett will generate earnings and cash quickly enough.
Moody’s downgraded Ford to the highest junk rating, Ba1, saying the automaker’s cash flow and profit margins are below expectations and likely to remain weak over the next two years. The descent to junk status affects one of the largest corporate bond issuers in the U.S. outside the financial sector.
Investors have traded Ford’s debt for roughly the past year at levels that implied the company was headed for junk. Hackett has struggled to win over Wall Street with an overhaul that includes cutting thousands of jobs, reviving an aging line of SUVs and ditching slow-selling sedans.
“It’s a pretty precarious situation that they’re in,” Charlie Chesbrough, senior economist of Cox Automotive, said by phone. “When a company gets a junk status rating, it will mean they have to pay a higher interest rate and it means a lot of institutional investors will have to think twice.”
Ford’s most actively-traded bonds...
Ratings Elsewhere ...
Lots of ‘Ifs’ ...
more, including links, video report [2:37 min.]