NEW YORK -- Fitch Ratings cut Ford Motor Co.'s debt ratings on Thursday but left them at investment-grade status, marking a third downgrade for Ford this month as the U.S. automaker struggles with flagging SUV sales and rising costs.
Despite the downgrade, the investment-grade rating means Ford's bonds may stay in some widely followed credit indices, preventing the forced selling that could have been triggered by a cut to junk.
Fitch said it was not likely to cut the No. 2 U.S. automaker to junk this year, which helped Ford's bonds rally. Standard & Poor's cut its ratings on Ford to junk earlier this month, in a move that surprised financial markets, while Moody's lowered Ford to a step above junk status.
Ford's ratings have fallen from top "triple-A" levels in the 1980s as it has lost market share to foreign rivals and paid costly health care benefits to its workers and retirees.
Fitch cut Ford's long-term credit ratings by one notch to "BBB," the second-lowest investment-grade rating, from "BBB-plus. It also cut the long-term ratings on Ford's finance arm, Ford Motor Credit Co., to "BBB" from "BBB-plus." The outlook on the new ratings is negative, meaning another rating downgrade is likely over the long term.
Ford Credit's notes with a 7 percent coupon due 2013 rose relative to Treasuries.
The spread on the notes, or extra yield over Treasuries that investors demand for taking a company's credit risk, narrowed 0.28 percentage point to 4.97 percentage points, according to MarketAxess.
Ford and its finance arm had about $161 billion of debt, including secured notes, as of March 31.