New York (AFP) – Moody’s downgraded Ford’s credit rating to speculative or “junk” status on Monday, citing the company’s weak financial outlook as it embarks on an ambitious restructuring.

Characterizing the auto giant’s current overhaul as “unprecedentedly large and challenging,” the ratings agency slashed Ford’s debt to the non-investment-grade “Ba1” — saying prospects for its cash flow and profit margins through the 2020-2021 period were poor.

Ford’s performance has eroded “during a period in which global automotive conditions have been fairly healthy,” Moody’s said.

“Ford now faces the challenges of addressing these operational problems as demand in major markets is softening and as the auto industry is contending with an unprecedented pace of change relating to vehicle electrification, autonomous driving, ride sharing and increasingly burdensome emission regulations.”

However, Ford “does have a sound balance sheet and liquidity position from which to operate,” said Moody’s senior vice president Bruce Clark.

The US automaker faces operational inefficiencies in all key regional markets, as well as a much-diminished outlook in China, which has seen profits sink from more than $1 billion in 2016 to a major loss, according to Moody’s.

Ford has made progress in lowering costs in China but the outlook is still uncertain because of an “increasingly competitive” auto market and the country’s weaker near-term growth rates, Moody’s said.

Considerably better is the outlook in North America, where revamps of the lucrative F-series pickup trucks should boost operating projects.

Moody’s said the company’s alliance with Volkswagen held promise but that it will have only “minimal impact” on Ford’s earnings and cash flow before 2022.

Shares of Ford fell 2.9 percent to $9.27 in after-hours trading.