Why Moody’s downgraded Ford

DETROIT — Roughly six years after Ford Motor Co. returned to investment grade and reclaimed its mortgaged Blue Oval, the automaker is once again in danger of plunging into junk bond status.

Moody’s Investors Service on Wednesday downgraded Ford to Baa3 from Baa2, a move the credit agency telegraphed earlier this year when it changed its rating outlook on Ford to “negative” from “stable.” The agency cited “erosion in the company’s global business position and the challenges it will face implementing its Fitness Redesign program.”

Ford last month said it would undergo an $11 billion global restructuring effort over the next three to five years.

“The Fitness program is a necessity, but it will take several years for material financial and operating benefits of the program to be realized,” Moody’s said.

“Success could be challenged by having to address the serious performance problems in multiple business units simultaneously. At the same time, Ford will have to continue investing in the areas critical for the future of the auto industry. These areas include alternative propulsion, autonomous driving, ride sharing and connectivity.”

Ford shares fell 0.4 percent to close Wednesday at $9.97 in New York.

Ford, in a statement, said it’s delivered “year after year of solid financial results” since the Great Recession.



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