MTP WORKER Posted October 22, 2011 Share Posted October 22, 2011 Ford debt upgraded by S&P12:02 PM, Oct. 21, 2011 | BY BRENT SNAVELY DETROIT FREE PRESS BUSINESS WRITER Filed Under Business Ford news •UAW Standard & Poor’s said today that it has upgraded Ford’s credit rating two notches to BB+ because of its improving financial condition and the ratification of the company’s new labor contract with the UAW. “We believe the contract will allow for continued profitability and cash generation in North America,” Standard & Poor’s said in a report today. The upgrade leaves the automaker just shy of investment grade status. Ford’s objective when it began negotiations with the UAW in July was to keep its fixed costs down so that it could convince rating agencies to boost the company's credit rating. “We believe the UAW contracts coming out of this cycle for both General Motors and Ford have generally lived up to the goal,” Eric Selle, a credit analyst for JP Morgan said in a report today. A higher credit rating helps a company reduce interest rates on its debt. Ford’s debt hasn’t been rated as investment grade since 2005. Ford’s stock increased as much as 62 cents, or 5%, to $12.32 in morning trading today while General Motors stock rose $1.03, or 4.5%, to $23.99. Also, stock markets in general were up today because of reports that European leaders are closer to reaching a deal to contain a debt crisis and as several major U.S. corporations reported profit increases. For Ford, the credit rating increase was the second in two days. On Thursday, Fitch Ratings upgraded Ford to BB+, or one notch shy of investment grade. “Fitch has reviewed the terms of the new agreement and believes that it provides the company with improved flexibility to allow continued positive financial and operational progress over the next several years,” Fitch wrote. UAW workers ratified a new four-year labor agreement with Ford on Wednesday. On Thursday, Ford told Wall Street analysts its labor costs will initially increase by 1%, but said those costs will fall over the life of the four-year deal with the UAW. Contact Brent Snavely: 313-222-6512 or bsnavely@freepress.com. 1 Quote Link to comment Share on other sites More sharing options...
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