Moody's may lower Ford Motor

Moody's Investors Service said it is reviewing the ratings of Ford Motor Co. (B2 corporate family, B2 senior unsecured and Caa1 subordinate) and Ford Motor Credit Co. (Ba3 corporate family and Ba3 senior unsecured) for possible downgrade.

The company's speculative-grade liquidity rating has been affirmed at SGL-1, the agency said, noting that the review follows Ford's announcement that as part of the acceleration of its Way Forward restructuring program it will significantly reduce production levels in its North American operations for the second half of 2006 in response to the continued erosion in the truck and SUV markets.

Moody's said it also expects that a more aggressive employee attrition program will be an important element of the Way Forward plan.

The rating agency believes that the announced production cuts, in combination with an accelerated attrition program and a continuing market shift away from trucks and SUVs, will contribute to a significantly negative cash flow during 2006.

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