Ford Back at Investment Grade After 6 Years in Junk [View all]
Ford Motor Co. (F)’s credit rating was raised to investment grade today by Fitch Ratings, ending six years of so-called junk status for the second-largest U.S. automaker.
Fitch lifted Ford to BBB-, the first level of investment grade, from BB+, the ratings company said in a statement. Fitch first cut Ford’s rating below investment grade Dec. 19, 2005, as rising fuel prices began curtailing sales of sport-utility vehicles and pickups that accounted for most of the automaker’s profit.
Returning to investment grade with Fitch and other ratings companies is one of Chief Executive Officer Alan Mulally’s goals. That would reduce Ford’s borrowing costs and permit it to recover collateral, including the company’s blue oval logo, used to obtain financing that enabled Ford to avoid bankruptcy.
“The upgrade of Ford’s ratings reflects the automaker’s significantly improved financial performance, balance sheet repair, and product portfolio improvement that have taken place over the past several years,” Fitch said in the statement. “Since the last recession, Ford’s management has been heavily focused on increasing profitability, growing liquidity, lowering debt and reducing the company’s pension obligations.”