TEXT-S&P cuts Ford's rating to 'CC'

(The following statement was released by the rating agency)

March 4 - Standard & Poor's Ratings Services today said it has lowered its
corporate credit rating on Ford Motor Co. (F.N) to 'CC' from 'CCC+'. We also
lowered the issue-level ratings on the company's senior secured term loan,
senior unsecured debt, and subordinated debt, while leaving the issue-level
rating on Ford's senior secured revolving credit facility unchanged. In
addition, the counterparty credit ratings and issue-level ratings on Ford Motor
Credit Co. (Ford Credit) and FCE Bank PLC remain unchanged. The outlooks on
Ford and Ford Credit are negative.

The downgrades on Ford follow the company's announcement today of a debt
restructuring, which we consider to be a distressed exchange and, as such,
tantamount to a default under our criteria. Under the plan, Ford Credit will
make a $1.3 billion cash tender offer for Ford's senior unsecured debt and a
$500 million cash tender offer for Ford's senior secured term loan. Ford will
offer a combination of equity and cash to holders of the company's 4.25%
senior convertible notes due 2036. Ford indicated that all debt acquired by
Ford Credit through the tender offers will be retired. In addition, Ford said
it intends to defer future interest payments on the 6.5% convertible trust
preferred securities issued by Ford Motor Co. Capital Trust II.

Our downgrades today do not reflect an increase in Ford's risk of
bankruptcy in our view--although, as we have noted previously, we believe the
risk will remain high for all three Michigan-based automakers for 2009 and
2010 because of the dismal state of industry demand and other industry
problems, such as the potential for supplier failures. (In fact, Ford's debt
restructuring, if successful, would reduce debt and cash interest expense and,
in our view, would lead to a modest decrease in the risk of a near-term
default.) Our downgrades are based on the financial pressure that Ford is
under to reduce its debt by retiring debt for less than originally contracted.
Similarly, investors' potential willingness to accept a substantial discount
to contractual terms suggests to us that they have significant doubts about
receiving full payment on obligations.

We expect the differential between the issuer credit ratings on Ford and
Ford Credit to be temporary because we still consider Ford Credit's default
risk to be indistinguishable from that of its parent, in accordance with our
criteria on captive finance subsidiaries. Ford Credit is using up to $1.8
billion of its cash to facilitate the debt restructuring, which we believe
underscores our view of the two entities as a single enterprise with close
financial and business ties.

Under terms of the tender offers, the total cash consideration paid to
most unsecured debtholders would be about 30% of par for those who tender
their notes by March 19, 2009, or 27% for those who tender after that date.
Senior secured term loan holders would receive between 38% and 47% of par,
depending on the outcome of a Dutch auction tender offer. Holders of
convertible notes would receive $80 in cash plus nearly 109 shares of Ford
common stock for every $1,000 of principal. Ford plans to complete the
exchange offers by April 3, 2009.

The outlook is negative. If the offers are completed as planned, we would
lower the corporate credit rating to 'SD' (selective default) and lower the
exchanged issue ratings to 'D'. We would then, shortly thereafter, assign a
new corporate credit rating on Ford based on our assessment of the company's
new capital structure and liquidity profile, while taking into account its
business prospects and other relevant rating considerations, including the
effect of any assistance the U.S. government provides. Ford is not seeking
government loans but has requested a standby credit line of up to $9 billion
to protect its liquidity against further market deterioration.

Our preliminary expectation is that, even with the substantial debt
reduction, the corporate credit rating would likely not rise above the 'CCC'
category immediately following the consummation of a debt exchange. We
recognize that the postexchange capital structure could result in
substantially lower debt and interest costs. However, we believe many
fundamental business risks would remain unchanged for at least the rest of
2009 and perhaps longer, most notably the company's exposure to deteriorating
vehicle demand globally, but also the substantial execution risk of the
company's ongoing restructuring and repositioning.

We could lower the ratings on Ford Credit and FCE Bank following
completion of the exchange offers if our assessment of Ford leads us to assign
a corporate credit rating of 'CCC' or lower. As noted above, given our view of
Ford Credit as a captive finance subsidiary, we would expect to re-establish
the equalization of Ford Credit's counterparty credit rating with Ford's
corporate credit rating. We currently also expect to maintain the one-notch
rating enhancement on FCE Bank from its parent, Ford Credit, which reflects
FCE's solid capitalization, regulated status, and ability to access
independent asset-backed funding.
RELATED RESEARCH
This rating action is based in part on the following criteria articles on
RatingsDirect:
"General Criteria: Rating Implications Of Exchange Offers And Similar
Restructurings," published Jan. 28, 2009, and "Captive Finance Operations,"
published April 17, 2007.

Complete ratings information is available to RatingsDirect subscribers at
www.ratingsdirect.com. All ratings affected by this rating action can be found
on Standard & Poor's public Web site at www.standardandpoors.com; select your
preferred country or region, then Ratings in the left navigation bar, followed
by Find a Rating.
Primary Credit Analysts: Robert Schulz, CFA, New York (1) 212-438-7808;

robert_schulz@standardandpoors.com

Gregg Lemos Stein, New York (1) 212-438-1730;

gregg_lemos-stein@standardandpoors.com
(New York Ratings Team)