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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