On Wednesday, credit rating agency S&P Global cut its rating of automaker Ford (F -0.81%) to junk status. That followed a similar downgrade from Moody's in September.

S&P Global's move leaves Fitch Ratings as the only one of the three major credit rating agencies giving Ford an "investment grade" rating. However, Fitch did just downgrade it to one level above junk status on Monday.

A man watches a large red arrow, as it crashes downward through the ground in front of him.

Ford has had its credit downgraded recently by all three of the top credit rating agencies. Image source: Getty Images.

Fear of recession

S&P Global cut Ford's rating from BBB- (its lowest investment-grade rating) to BB+ (its highest junk, or non-investment grade, rating). On Monday, Fitch lowered Ford's rating from BBB to BBB-, and also assigned a "negative" outlook to the company. 

Although Ford shut down its North American production on March 19, the agencies said that wasn't a large factor in their decisions, as Ford has ample cash reserves and the financial flexibility to get through a short-term setback. But forecasters were already anticipating a drop-off in sales of the light vehicles that Ford manufactures. Now, the analysts are also concerned about the potential for a prolonged period of still-lower sales even after the coronavirus pandemic subsides, if economies across the globe get stuck in prolonged recessions.  The S&P analysts also consider there to be a good chance that Ford's plants will stay shut down for longer than is currently expected due to the coronavirus.

Financial concerns

Some of the concerns about Ford's financial health predate the pandemic. Moody's downgrade of Ford to Ba1 (its highest junk rating) from Baa3 (its lowest investment-grade rating) came in September amid concerns that CEO Jim Hackett was embarking on a costly "redesign" effort just as the global auto market seemed to be slowing down. Despite Ford's solid balance sheet, Moody's believed Ford might have trouble paying its bills in the near future.

For its part, S&P Global cited Ford's weak competitive position in its analysis.