Moody's Investors Service took note of Ford's ongoing success in rebounding from its well-documented down days. The ratings agency gave the automotive manufacturer a stable outlook and upped its Corporate Family Rating (CFR) of Ford Motor Company to Ba2 from B1.
Also raised were Ford's probability of default to Ba2 from B1; senior secured credit facility to Baa3 from Ba1; senior unsecured to Ba3 from B2 and preferred stock to B1 from B3. Furthermore, Moody's also raised the CFR and senior unsecured ratings of Ford Motor Credit Company LLC, FCE Bank Plc, and Ford Credit Canada Limited to Ba2 from Ba3.
In its announcement Friday, Moody's lauded Ford's success at repositioning its operations and believe the company's cash flow will only continue to improve through at least 2011 thanks to improved industry and internal fundamentals:
"The sustainability of Ford's improving performance is supported by the extensive restructuring that has taken place in the US auto sector. Key elements of this restructuring have been the massive head-count reductions that lowered fixed costs and eliminated excess capacity, and the implementation of a new UAW contract that discontinued the JOBs bank program and freed OEMs of retiree health care obligations. This has resulted in a much healthier and commercially viable business environment for domestic OEMs. An additional factor contributing to the sustainability of Ford's performance is the highly competitive position of its existing vehicle portfolio, and the robustness of its new product pipeline. During the first half of 2010, Ford's earning and cash flow generation significantly exceeded our expectations, largely due to the competitiveness of its product portfolio. In addition, Ford has been at the forefront of embracing the more disciplined business practices made possible by the restructuring of the US auto sector."
Brian Shappell, NACM staff writer