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.