The Next Big Short: Fallen Angel Bonds—And Here Comes Ford’s $80 Billion Of Debt

And so, with everyone lying in wait for the proverbial “spark that lights the fire” and leads to the next inevitable bond crash, yesterday Moody’s may have been playing with fire when the rating agency downgraded Ford Motor’s credit rating was to just one notch above junk, making it the biggest single “fallen angel” candidate in the US bond market.

Adding to Ford’s recent woes after it embarked on a costly restructuring that could take years to complete, and rising costs as a result of Trump’s auto tariffs, on Wednesday Moody’s downgraded Ford to Baa3 from Baa2 with a negative outlook, which means that just one more downgrade, and Ford will be rated junk.  The ratings company cited erosion in Ford’s “global business position and the challenges it will face implementing” its restructuring effort that could rack up $11 billion in the next three to five years.