Ford: A Ratings Agency Upgrade in Autos (F)

Ford Motor Co. (NYSE: F) has just gotten good news, albeit on a day where good news is getting discounted.  Moody’s has upgraded the credit ratings of both Ford Motor Company and of Ford Motor Credit Company.

The raised ratings include Ford’s Corporate Family Rating and Probability of Default Rating to a rating of ‘B1’ from ‘B2.’  Also raised is the secured credit facility to a rating of ‘Ba1’ from ‘Ba2,’ the senior unsecured debt to a rating of ‘B2’ from ‘B3,’ and the trust preferred rating was raised to a rating of ‘B3’ from ‘Caa1.’ Also raised today are the ratings of Ford Credit’s corporate family rating and the senior debt rating to a rating of ‘Ba3’ from ‘B1.’ The rating outlook for Ford and Ford Credit is stable, and the speculative grade liquidity rating was kept at SGL-2.

As far as the reasons, you probably know.  A better auto environment mixed in with the notion that Ford does not owe Uncle Sam in the same manner as GM or Chrysler.  The upgrade anticipates that the new business model and recovering demand “will generate significantly improved operating and financial performance.’

Moody’s further noted that the prospect of growing free cash generation could enable Ford “to undertake meaningful deleveraging during 2011 and beyond.”

Moody’s also noted a robust new-product program, a more disciplined production level approach and incentives, expanded cost benefits under the new union agreements, globalizing platforms and product offerings, and a healthy liquidity profile all culminating together to allow Ford to take domestic market share.

In short, Americans want to buy Ford over GM and Chrysler and Ford has a better operating model.  Again, this is good news but on a bad trading day.  Ford’s stock is down 3.1% at $11.58 versus a 52-week trading range of $5.06 to $14.57.

JON C. OGG