- The Washington Times - Monday, April 13, 2009

NEW YORK (AP) - Standard & Poor’s Ratings Services on Monday raised its ratings for Ford Motor Co. to “CCC+” from “SD-,” citing the results of the automaker’s recent debt swap.

The outlook is negative.

S&P; said the debt exchange improved Ford’s capital structure by cutting its automotive debt by $9.9 billion, or 38 percent.

But S&P; noted that Ford estimates that the resulting annual cash interest savings will be less than $600 million, a fraction of the company’s automotive cash outflows in 2008 and expected outflows in 2009.

S&P; said it expects the Dearborn, Mich.-based automaker’s fundamental business risks to remain unchanged for at least the rest of 2009 and maybe longer, as global demand for vehicles remains weak and the automaker attempts to restructure itself.

“We expect continued heavy cash losses in Ford’s automotive operations for at least the next year,” S&P; credit analyst Robert Schulz said in a statement. “The outflows are being caused by weak auto sales in almost every market, but especially in the U.S. and Europe.”

Schulz said the ratings also reflect worries that General Motors Corp. or Chrysler LLC could file for bankruptcy in the near future, which could increase Ford’s cash burn because of the problems it would cause at shared auto suppliers.

Last week, S&P; cut Ford’s corporate credit rating to “SD,” or “selective default,” calling the debt swap a “distressed exchange” and therefore equivalent to default.

S&P; left unchanged its “CCC+” ratings for Ford Motor Credit Co. and “B-” ratings for FCE Bank, Ford Credit’s European bank.

Ford shares rose 2 cents to close at $4.26.

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