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S&P downgrades Ford over manufacturing disruption


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S&P downgrades Ford over manufacturing disruption

S&P Global Ratings on March 25 downgraded Ford Motor Co. to speculative-grade from investment-grade and placed it on CreditWatch with negative implications amid the coronavirus pandemic.

The rating agency lowered its long-term issuer credit rating on Ford to BB+ from BBB- and assigned issue-level ratings of BB+ on the company's unsecured debt.

The ratings action comes a day after the Michigan-based automaker extended the shutdown of its plants in North America. The company suspended production at its manufacturing plants in North America and Europe on March 19.

S&P Global Ratings said Ford's credit metrics and its competitive position became borderline for the investment-grade rating before the COVID-19 outbreak. Ford is unlikely to maintain the required metrics over the expected downturn in light-vehicle demand, Ratings said.

The rating agency projects that Ford's EBITDA margin will remain below 6% on a sustained basis and that the company's free operating cash flow to debt is unlikely to exceed 15% on a consistent basis.

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