S&P Upgrades Ford

Thanks to the deal Ford recently reached with its unions, Standard & Poor’s raised their credit rating two notches. It’s now only one away from investment grade. The company’s debt has been in junk land since 2005.

Standard & Poor’s Ratings Services raised Ford two levels to “BB+” from “BB-,” saying the agreement will allow its North American operations to remain profitable.

Ford Motor Co. shares rose 48 cents, or 4 percent, to $12.19 in early afternoon trading.

The agency said strong performance in North America has helped Ford generate global profits in the past two years. The new 4-year contract with the United Auto Workers “will allow for continued profitability and cash generation in North America,” it said.

The union, which represents 41,000 Ford employees, approved the contract Wednesday. It includes signing bonuses but no annual pay increases, and it will let Ford hire more workers at lower wages.

Ford executives said it will raise labor costs by less than 1 percent each year — $280 million this year and $80 million a year after that. Fitch Ratings upgraded Ford on Thursday, also to within one level of investment-grade status.

Moody’s Investor Service has also said it’s reviewing its below-investment grade ratings for the automaker.

Posted by on October 21st, 2011 at 6:43 pm

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