DETROIT (Bloomberg) -- Ford Motor Co. and its finance arm had their credit ratings upgraded one level by Moody's Investors Service because of demand for the company's new models and a lower cost structure.
Ford was raised to B1, the fourth level below investment grade, Moody's said Tuesday in a statement. The upgrade, the first since March 17, includes the Ford Motor Credit finance unit and affects about $65 billion in debt. Moody's outlook on Ford is “stable.”
“Ford now has a healthy and sustainable operating model,” Bruce Clark, Moody's senior vice president, said in the statement. “As demand in the U.S. continues to recover through 2011, Ford is well-positioned to generate stronger operating performance and cash flow.”
Ford, the only major U.S. automaker to avoid bankruptcy last year, has cut 47 percent of its North American work force since CEO Alan Mulally arrived from Boeing Co. in 2006. The automaker earned $2.7 billion last year, reversing three years of losses. U.S. sales have increased 33 percent through April, and Mulally has said the company will be “solidly profitable” this year.
Ford was lowered to junk by Moody's in August 2005, more than three months after Standard and Poor's gave the automaker a non-investment grade rating. Moody's said at the time that Ford faces “continued challenges in addressing its uncompetitive cost structure in North America.''