Five-year credit-default protection on Ford Motor Credit tightened to 380 basis points last Wednesday from 460bps the previous week. The move came as a reaction to stronger-than-expected profits for the first quarter, said a New York-based trader. Protection on almost all autos moved in on the back of Ford, with a notable exception being protection on General Motors Acceptance Corp., which blew out Tuesday as the corporate warned it might not meet its earnings targets. Five-year protection on GMAC traded at 250bps Wednesday, out from 230bps two days earlier, said the trader.
Ford was the latest liquidity threat and the positive news of its earnings will take a lot of volatility out of the market, said the trader.
Bruce Clark, senior v.p. at Moody's Investors Service, which rates Ford Baa1 with a negative outlook, said the auto manufacturer is making good progress at implementing its restructuring program. In order to shake off its negative outlook the corporate will need to continue making improvements and lay the groundwork for profits to return, he said. What Ford is not capable of controlling, however, is the pricing environment, which is expected to become increasingly challenging and which will put pressure on its ratings, he concluded.
Five-Year Mid Market Protection On Ford Motor Credit
