Ford Motor Company suffered another downgrade to its debt rating yesterday, although it was kept just a notch above junk status.

Moody's cut its rating to the lowest investment grade, citing the carmaker's poor financial performance. The credit rating agency said the tough market conditions in north America could lead it to downgrade the company's debt further.

Ford and General Motors were dealt hammer blows a week ago when another of the three credit rating agencies, Standard & Poor's, downgraded both to junk status. This could raise their borrowing costs sharply while hampering the ability to raise further capital. Ford has $160bn (£85bn) in debt.

Ford reported a 38% slide in first-quarter profits last month to $1.2bn. The company also admitted it would miss its target of achieving $7bn in annual profits by 2007 that it set when it launched its plan three years ago.