Moody’s Investors Service has raised Ford Motor Co. to investment grade – from Ba2 to Baa3, making it the second ratings agency to restore the automaker’s investment-grade debt rating.
The move means the automaker can reclaim its iconic Blue Oval logo and billions of dollars’ worth of other assets pledged as collateral on $23.4 billion in loans taken out in late 2006.
“When we pledged the Ford Blue Oval as part of the loan package, we were not just pledging an asset. We pledged our heritage,” Ford’s executive chairman, Bill Ford, said in a statement.
“The Ford Blue Oval is back where it belongs with the Ford family of 166,000 employees around the world.”
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.
The push by Ford back into investment grade came largely from its impressive financial performance in North America, the same place that used to be its biggest anchor. A few weeks ago, Ford reported a $1.4 billion first quarter profit and a strong, 11% profit margin in its North American region.
“The key factor in our considering an investment-grade rating for Ford was whether or not the company would be able to sustain its strong performance,” said Moody’s Senior Vice President Bruce Clark.
“We concluded that the improvements Ford has made are likely to be lasting.”
Ford shares rose 13 cents, or 1 percent, to $10.34 in after-hours trading.
Moody’s also affirmed General Motors Co.’s credit rating of Ba1, one notch below investment grade, on Tuesday. Moody’s said GM remains on track to return to investment grade within the next year.