Ford to buy back $500 million in debt

DEARBORN, Mich., Aug. 16 (UPI) -- Ford Motor Co. plans to improve its financial health by selling as much as $500 million of its shares to buy back debt from its credit arm, a U.S. filing shows.

The Dearborn, Mich., automaker's finances took a tumble after a recent $2.1 billion write-down blamed on declining resale values of trucks and sport-utility vehicles, The Wall Street Journal reported Saturday.

Ford posted a loss of $8.7 billion in its second quarter.

The newspaper reported Ford will sell the stock to buy down Ford Motor Credit's debt that is due before 2012.

Ford disclosed its plans in a filing with the U.S. Securities and Exchange Commission Thursday.

Analysts say Ford could turn a small profit by buying back its debt at a discount.

"Building equity is constructive," said Bruce Clark, a senior vice president at Moody's Investors Service. "But in no way is it going to have a material effect on the overall credit profile."

Another credit rating agency, Standard & Poor's Ratings Services, said its negative ratings on Ford wouldn't be affected by a stock sale.

"We would view such purchases as a modest positive for Ford's consolidated credit quality," Standard & Poor's said in a statement.