During the last five years while cutting its work force in the U.S. and Europe, Ford has announced investments totaling almost $5 billion in China.
Fitch Ratings has upgraded the Issuer Default Ratings (IDRs) for Ford Motor Company (Ford) and its Ford Motor Credit Company LLC (Ford Credit) captive finance subsidiary to BBB- from BB+. The senior secured credit facility remains at BBB-, and the outlook is stable.
This means that Ford Motor and Ford Credit debt is investment grade for the first time since 2005 when Ford Motor was losing billions of dollars.
Moody’s Investors Service and Standard & Poor’s still rate Ford as junk or speculative-grade, Ba1 and BB+, respectively.
Fitch said that the upgrade of Ford’s ratings reflects the automaker’s significantly improved financial performance, balance sheet repair, and product portfolio improvement that have taken place during the past several years.
“Fitch believes that the work that has been accomplished has put the company in a solid position to withstand the significant cyclical and secular pressures faced by the global auto industry,” the rating service said in its report.
Nevertheless, Fitch cautioned that Ford faces a number of risks. Notably, ongoing uncertainty the strength and pace of the global economic recovery, and the durability of global auto demand remain uncertain.
“Additional risks reflected in the low-investment grade profile include high debt levels, a large pension deficit, industry competitive dynamics, and a relatively weak market position in Asia,” Fitch said.
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
