Moody's Investors Service became the second rating agency to restore Ford Motor Co.’s investment grade rating, a move that allows it to release the assets it uses as collateral for its outstanding loans – including its trademark blue oval symbol.
Moody’s lifted the automakers’ senior unsecured ratings by one notch to 'Baa3', the lowest investment grade rating, from 'Ba2'. The automaker’s finance arm, Ford Motor Credit Co., wasalso lifted, to 'Baa3' from 'Ba1'.
Fitch Ratings upgraded Ford last month. Standard & Poor's maintains a 'BB+' rating on Ford Motor Co. and Ford Motor Credit.
Moody’s lowered the rating of Ford's secured credit facility, to 'Baa3' from 'Baa2', in anticipation of the imminent fall away of the bank agreement's security interest. This would result in any outstandings being pari passu with Ford's other senior unsecured debt.
Moody’s cited the strength of the Ford’s position in North America, its robust liquidity position, the ratings agency’s expectation that the company will continue to embrace sound operating and financial disciplines. “We believe that these strengths will enable Ford to maintain an investment grade profile in the face of the sector's ongoing cyclicality and weakness in the European market,” it said.
Ford was the only one of the big three U.S. auto makers not to be bailed out by the U.S. government in 2009, but it carries more debt than Chrysler Group or General Motors. The Dearborn, Mich.-based company borrowed $23.5 billion in 2006, putting up virtually all of its assets as collateral. The cash helped carry it through the lean times.
