Fitch Ratings Upgrades Ford

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By AutoObserver Staff October 21, 2011

Fitch Ratings said it is upgrading its credit rating for Ford Motor Co. and Ford Motor Credit from BB to BB+ and also issued a “positive outlook” for Ford’s future rating potential, a boost to Ford’s objective of returning its credit to investment-grade status. In the Fitch rating system, a one-step move to BBB- indicates the rating service’s first level of investment-grade rating. Fitch said in its announcement that “Ford’s ratings could be upgraded in the next 12 to 24 months,” and “An upgrade to an investment-grade (Issuer Default Rating) of BBB- or higher would require further conviction that the company's operating and financial profile are sufficiently strong to withstand the myriad secular and cyclical pressures present within the industry.”

A Ford spokesman issued a statement saying, “We continue to make progress on our plan, and we are pleased with this positive step. Ultimately, the credit rating agencies determine when we return to investment grade. Our job is to stay focused on making progress on our plan.” Fitch’s statement added that for Ford to win investment-grade rating for its bonds will require the company to continue with its plan to reduce debt to $10 billion by mid-decade and maintain total liquidity at or above current levels and that Ford’s current underfunding of its global pension plan continues to pose risks.

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Ford, GM may qualify for higher credit ratings

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NEW YORK — Ford and General Motors' new union contracts may qualify them for higher credit ratings.

Moody's Investors Service said Wednesday it's reviewing ratings for Ford.

The Dearborn, Michigan, automaker reached a deal on Tuesday with the United Auto Workers for a new four-year contract.

The automaker's ratings under review include "Ba2" for corporate family and probability of default, and "Ba3" for senior unsecured debt, both of which are so-called junk status. They also include "Baa3" for secured bank debt, the lowest level of investment grade.

An upgrade would return Ford more squarely to investment-grade status, which the automaker has said is one of its top goals. About $55 billion of debt would be affected.

Moody's is already reviewing Detroit-based GM's ratings after its workers ratified a similar contract last week.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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NEW AUTOMOBILE, Standard & Poor's Hikes GM, Ford Credit Ratings

Standard & Poor’s Credit Rating Services late Thursday said it is hiking the credit ratings for both General Motors Co. and Ford Motor Co. after years of ranking the automakers’ bonds as “junk.” For GM, it means a hike of two levels in the S&P ratings ladder to BB+, just one level below investment-grade. Ford, S&P said, will get a one-level upgrade, also to BB+, as soon as the company can announce it has reached a new 4-year labor contract with the United Auto Workers Union.
The two automakers have struggled to regain investment-grade status in the financial community, and the ratings bump from S&P is another sign of confidence that the domestic auto industry is regaining its health. It also means potentially lower borrowing costs for Ford and GM. “We are pleased that S&P has recognized the progress we are making, said Dan Ammann, GM senior vice president and CFO, in a statement. “Our fortress balance sheet and low breakeven point are helping us succeed even in uncertain economic times.”

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