Ford Faces Junk Bond Status

By Douglas A. McIntyre Published May 9, 10:05AM EDT

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Ford Motor Co. (NYSE: F) faces a downgrade from investment grade status to junk.
Its black eye is primarily due to its feeble effort to enter the EV market.

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Ford Faces Junk Bond Status — © Laurence Dutton / Getty Images

According to Bloomberg, Ford Motor Co. (NYSE: F | F Price Prediction) faces a downgrade from investment grade status to junk. That is an image problem, and it also means the company will pay more for money.

Bloomberg says its BI unit reports that Ford’s investment-grade status is hanging on by a thread. The downgrade by S&P might be preceded by a “negative watch.” Ford carries a BBB− rating today.

The automaker has $47 billion in bonds, which makes it the largest issuer in the sector.

Is it any wonder? The company has been a train wreck for years. The Ford family has let William Clay Ford, Jr., act as executive chair and pick several chief executives who were not competent to run the company. The latest of these is Bill Farley, who likes to spend time making podcasts that almost no one watches.

The market has been punishing the stock. Its share price is down by 15% this year.

Ford’s black eye is primarily due to its feeble effort to enter the electric vehicle (EV) market. It claimed it would invest $30 billion and ramp production to a run fate of 600,000 a year, but it has virtually abandoned that plan. About 4% of its first-quarter sales were EVs.

The company attempted to sell EVs by rebranding its most famous cars. The Mustang, a sports car, became the electric crossover Mustang Mach-E. The F-150, one of the most successful vehicles in American history, became the F-150 Lightning.

Ford has less than 10% of the U.S. EV market. There is scant data that this will improve much.

Is there any question about why Ford’s bonds may be downgraded to junk.

Ford’s 8% Yield Is an Idiot Test

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.