Moody’s Raises Ford to Investment Grade

First Fitch raised Ford‘s ($F) debt to investment grade, now Moody’s has followed.

The upgrade allows Ford to enjoy lower borrowing costs and expands the number of potential buyers for its bonds.

It also represents a symbolic win for Ford, which nearly collapsed six years ago before mortgaging most of its assets to borrow $23.5 billion to finance a restructuring. Ford continued to use the Blue Oval icon and the other assets. The icon is stamped on the grill of Ford’s cars and trucks.

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Moody’s cited Ford’s improved lineup of cars and trucks, limited use of incentives to spur sales, and much lower break-even point in North America for its decision.

In 2009, Ford could break even in North America if it sold 3.4 million cars and trucks. Now, that level has dropped 45 percent to 1.8 million in sales, according to Moody’s.

“We concluded that the improvements Ford has made are likely to be lasting,” said Moody’s analyst Bruce Clark.

Ford wants to cut its automotive debt to $10 billion by the middle of the decade as well as reduce the risk posed by its pension obligations.

Ford’s automotive debt was $13.7 billion in the first quarter. Last month, Ford said it would offer lump-sum pension buyouts to current white-collar retirees, a move that may lower its U.S. pension obligation by one-third.

Posted by on May 23rd, 2012 at 10:31 am


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