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Ford Credit Rating Raised Two Levels by Moodys

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On: Mon, Oct 11, 2010 at 3:14PM | By: Sherry Christiansen


Ford Credit Rating Raised Two Levels by Moodys

According to Moody’s Investors Service, Ford Motor Company has achieved another rise in its credit rating, this time by 2 levels, Moody reported that Ford’s performance has “significantly exceeded expectations.” This was the 5th upgrade that Moody has given Ford in the last year, raising the Detroit automaker’s rating from B1 to Ba2. Moody stated it has a very optimistic outlook toward Ford Motor Credit Co., Ford’s finance auxiliary.

“The company is well positioned to continue generating strong earnings and cash flow through 2011, and to further strengthen its balance sheet,” J. Bruce Clark, Moody’s senior vice president, said in a statement. “At the same time that the industry’s business practices have become more disciplined, Ford is coming to market with an exceptionally strong product portfolio.”

Lewis Booth, Ford CFO, stated that moving back into investment grade for the first time since 2005 has “become a rallying cry within the company.”
Ford has been able to pay off $7 billion in debt as a result of its profitable second quarter although it continues to have more financial debt than General Motors after GM claimed bankruptcy last year.

Ford earned $4.7 billion in the first 6 months this year, the biggest first half profit since 1998. Sales of the redesigned Fusion and Taurus sedans were instrumental in propelling Ford’s sales to 21% through September of this year.

“Ford has shifted from being an average high-yield quality company to better-than-average,” said Christopher Garman, president of Orinda, California-based Garman Research LLC, which analyzes the high-yield bond market. “They very well could get back to investment grade.”

Although GM received a higher rating than Ford from Standard and Poor’s Rating service (due to General Motors having a lower debt ratio after filing bankruptcy in 2009), “We expect Ford’s credit measures to be improving because of the improvement in the earnings, whereas GM, some of the balance sheet metrics are strong or relatively better because of the debt reduction,” Robert Schulz, a Standard & Poor’s credit analyst, said in an interview Thursday.




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