Moody’s hikes Ford, GM credit ratings to the cusp of investment grade

Moody’s hikes Ford, GM credit ratings to the cusp of investment grade
Craig Trudell
Automotive News | October 27, 2011 – 6:34 pm EST

DETROIT (Bloomberg) — Moody’s Investors Service raised Ford Motor Co. and General Motors Co.’s credit ratings to the cusp of investment grade, citing the automakers’ new labor contracts with the UAW.

Moody’s lifted Ford and GM’s ratings one level each to Ba1, the highest non-investment grade, with a positive outlook on both, according to separate statements by the New York-based company on Thursday.

The automakers’ four-year agreements with the UAW allow the companies to maintain “competitive” cost structures in North America, Moody’s said.

“One of the hurdles in getting to an investment grade rating is the difficulty in gauging just how bad things could get in Europe,” Bruce Clark, a New York-based analyst for Moody’s, said in the company’s statement on Ford.

GM’s key challenges include increasing the use of global vehicle architectures and improving the competitiveness of its operations in Europe, Clark said.

Standard & Poor’s raised Ford’s credit rating two levels to BB+, the highest non-investment grade, from BB-, and assigned a stable outlook on Oct. 21.

The New York-based company raised GM to the same rating on Sept. 29.

S&P’s stable outlooks on Ford and GM imply there is less than a one-third chance that the companies will be upgraded again within a year, Robert Schulz, S&P’s auto analyst, said Oct. 19.

Ford fell to so-called junk status six years ago.

The company has said it may restart its dividend, which is no longer predicated on returning to investment grade.

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