No doubt Ford has seen the light shining at the end of its turnaround plan for a while, but now The Blue Oval is getting so close to the daylight it might even be able to smell the fresh air. By the end of 2005, Ford bonds were rated so low by the three major ratings agencies they was floating in the cistern below the basement of junk status. After Mulally came onboard, the company put up everything to get the money to work his plan, from the company logo to its real estate. In order to get it back, two of the three agencies need to rate Ford bonds as investment grade, and one, Fitch, has just done so.

Fitch has certified Ford bonds as BBB-, the first investment-grade level, and issued a stable outlook for the company and its finance arm. Ford remains just one step below investment worthy with both Standard & Poor's and Moody's, but with "a solid Q1" predicted by by Citigroup and Morgan Stanley analysts (they expect earnings to match Q1 2011 in spite of European and Asia-Pacific sales doldrums), the final turn might not be far away.

When it does, Ford will have achieved what it laid out as Job One for 2012. As well as getting its assets out of hock, Dearborn will also greatly reduce its borrowing costs. Ford's head of investor relations, Michael Seneski, vowed in December that Ford would return to investors' good graces by showing "authoritative and highly credible insight into our automotive business and Ford Credit." We're of the opinion that an increasing flow of good products haven't hurt, either.


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  • 16 Comments
      Walt
      • 2 Years Ago
      From the article -"By the end of 2005, Ford *STOCK* was rated so low by the three major ratings agencies that it was floating in the cistern below the basement of junk status." This rating increase has nothing to do with Ford stock, the rating agencies are only concerned about company interest bearing instruments, primarily bonds and debentures.. What a rating increase mainly means is that Ford, should it chose to do so, will be able to offer bonds and debentures to the investing public at a lower interest rate than before their credit worthiness was increased.
      Jay
      • 2 Years Ago
      Just to be clear, ratings agencies rate credit (debt), not stock (equity) as the author writes.
      Ben
      • 2 Years Ago
      The author is completely off-base here. Ford's BONDS were raised to investment grade. That rating system is never used for stocks.
      IBx27
      • 2 Years Ago
      Ford bonds were rated so low by the three major ratings agencies they was floating in the cistern below the basement of junk status. major ratings agencies they was floating in the cistern below they was floating they were
      BC
      • 2 Years Ago
      Please learn the difference between stocks and bonds before reporting on this story a third time.
      Randy
      • 2 Years Ago
      This DOES relate to stocks people. Everyone saying it doesn't is high. I'm in at 1.85 and have been waiting patiently for this day. Yeeeeee haaaaaa!
        Ben
        • 2 Years Ago
        @Randy
        It may have some secondary effect on the stock price, but the ratings agencies don't rate stocks. The creditworthiness rating is an assessment of how likely the company is to not repay its debts (bonds). Stock isn't debt, but is ownership in the company.
      cardiologymidwest
      • 2 Years Ago
      Got to hand it to him and the board that chose him - he threaded the needle through the financial crisis. Rock star.
      OnlineTrading
      • 2 Years Ago
      I wouldn't jump in and start buying Ford stock just because their bonds have been extracted from junk status. This company has many more hurdles to face.
        throwback
        • 2 Years Ago
        @OnlineTrading
        I bought some stock at $2.00 per share. I've been tempted to sell but I like the long term outlook for the company. As long as they keep paying down their debt I'll hang in.
      Making11s
      • 2 Years Ago
      Are those dollar signs in Mulally's eyes?
        • 2 Years Ago
        @Making11s
        [blocked]
      Tstag
      • 2 Years Ago
      Mullaly a rock star? Not really he cost Ford about 12 billion dollars for selling the fastest growing premium car company on the planet early. Ford Europe only made 18 million dollars last year compared to JLR's 1.8 billion dollars last year. The future in Europe is less capacity for car makers like Ford, and more capacity for premium car brands. Ford is too US focused and therefore heavily exposed in that market, with no real premium brands (and no Lincoln doesn't count)
      Hammad Tauqeer
      • 2 Years Ago
      I have been trading this Ford for awhile now. I got alerted well before the volume started to pick up and because of this I was able to score a nice profit a few times. The report helped me understand the complete scenario and the pros and cons. It’s always best to buy before everyone else does. Check it out at vippennystocksite.com (Kindly, copy and paste the link in to your browser.)
      hevace
      • 2 Years Ago
      Fords have always been just a bit better than junk. Ask the man who owns one! (Me.)
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