Fitch raises default risk rating on Ford, Ford Motor Credit finance unit
By APMonday, January 11, 2010
Fitch raises Ford’s default risk rating
NEW YORK — Fitch Ratings on Monday upgraded its assessment of Ford’s default risk, citing an improved economic environment and the company’s stronger margins, market share and cash position.
An issuer default rating assesses a company’s risk of defaulting on interest payments. Fitch raised its IDR on Ford and its finance unit, Ford Motor Credit, by two notches to “B-” from “CCC.” The ratings continue to qualify as non-investment, junk-grade status.
Ford, the only U.S.-based automaker to avoid bankruptcy protection and not take government aid, fared better than its two Detroit rivals in 2009, with overall sales down 15 percent last year compared with 36 percent for Chrysler and 30 percent for GM.
Ford sales surged 33 percent in the final month of the year thanks to strong demand for midsize cars. It gained U.S. market share in 2009 for the first time since 1995, helped by critical raves for its fuel-efficient cars, like the midsize Fusion. That vehicle took top car honors at the Detroit auto show Monday, and Ford’s Transit Connect compact van won the 2010 North American Truck of the Year award.
Expectations that Ford will generate positive cash flow in 2010 and Ford Credit’s improving access to capital both factored into the ratings agency’s upgrade. Fitch said its outlook for the companies remains positive.
Shares of Ford rose 42 cents, or 3.6 percent, to close at $12.11. Earlier in the session, shares reached a new 52-week high of $12.14.
