S&P just joined Moody's in rating Ford bonds high yield (junk). Since the majority of the ratings agency's consider Ford bonds junk it will be made official April 1st
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Molly Smith, Bloomberg News, says the rates Ford will get will prevent them from returning to bond market anytime soon
Would be nice if GM or FCA bonds were also junk. I hope Ford's new ratings do not give our competitors significant financial advantage.
Ford Credit will have to ramp up its use of Securitization now to fund financing vehicles. That is what got it through the Great Recession.
Does Ford Credit need new bonds to underwrite auto loans and financing? It would be bad if Credit was less profitable as they have been great contributors to Ford's bottom line
Some reading on that:
https://www.ft.com/content/95035b47-f4ab-479e-a79c-2d0d981e658f
https://www.bnnbloomberg.ca/ford-becomes-largest-fallen-angel-after-s-p-downgrade-to-junk-1.1412428
Implication is some investors (e.g. pensions funds) will not be allowed to invest in Ford anymore (as per their policy not to invest in junk funds) and raising money will be more expensive (investors expect higher return to compensate for the risk of putting money in a junk company).
I guess the positive side is Ford just used a rather big credit line last week, so they may not need to raise money very soon.