S&P Downgrades Ford Rating Below Investment Grade

Standard & Poor"s on Friday downgraded the rating of Ford Motor Corp. from "B-" to "CCC+" outlook negative, following the decrease in the demand for cars on both US and European markets. According to S&P, the current level of Ford"s rating is below investment grade.

"We expect Ford"s cash outflows to further reduce its cash balances during the next few quarters, which will test the company"s ability to maintain sufficient liquidity throughout 2009," said S&P analyst Robert Schulz.

In March 2008, Ford became the majority shareholder in Romania"s Automobile Craiova (RASDAQ:AUCS) after having bought 72.4% of the shares for 57 million EUR from the State. Ford announced planned investments of 675 million EUR. Despite the downgrade of Ford"s rating, Romania"s former Finance Minister Sebastian Vladescu believes the US motor company will still make the planned investments in Craiova.

SIF Oltenia is the second largest shareholder in Automobile Craiova with 22.06%. Tudor Ciurezu, Vice President of SIF Oltenia, said: "I can"t believe that the United States would let a flagship of the American motor industry to close down. I believe they will find solutions."

Paul Brendea, a financial analyst with SSIF Prime Transaction, said that the S&P decision could push Ford into even bigger problems because financing was going to become more difficult. Automobile Craiova has a share capital of 39.78 million RON divided into shares with a face value of 2.1 RON. AUCS shares are traded on RASDAQ, Tier III-R since 9 November 1996.

Internationally, Ford Motor reported operational losses of 2.98 billion USD in Q3, following a plunge of sales triggered by the global financial crisis.