July 12, 2009
Ford’s debt burden said worrisome
U.S. automaker Ford Motor Co. has avoided bankruptcy like its Detroit competitors, but it faces a weighty debt burden, an analyst says.
Even if Ford is successful in meeting its sales goals, it may still be as much as $36 billion in debt by 2011 when it expects to reach profitability, Citibank analyst Itay Michaeli said in an interview published Sunday by the Detroit Free Press.
So even with a pretty impressive turnaround "¦ you are still talking about leverage likely to be double that of their competitors, Michaeli said of Ford's situation.
The question "¦ is what do they do between now and then to ensure their balance sheet is where it needs to be?
That creates somewhat of a disadvantage (for Ford) with respect of cost of capital and financial flexibility, Bruce Clark, a senior vice president for Moody's, told the Free Press.