Autoblog

As Tata's acquisition of Jaguar and Land Rover inches closer to completion, an anonymous source inside the Indian automaker has revealed that the company has secured a $3 billion loan in order to finally finance the take-over. The loan is reported to come from the banks of Citigroup and JPMorgan, although both financial firms as well as Tata have refused to comment on the reports.

Additional sources of funding for Tata could come from domestic and foreign debt markets, from which Tata could raise an additional $4 billion. That would also come in handy for investing in the production of the upcoming Nano, or even the rumored purchase of shares in Ferrari. Financial services analyst Standard & Poor's, however, is currently reviewing Tata's credit rating, which stands at a high BB+ level due to the increased debt the carmaker will inevitably incur from the acquisition of these two luxury brands from Ford.

[Source: Automotive News – sub. req'd]

After a very rough June where both GM and Ford had terrible overall sales vs. the same month in 2006, one would expect investment firms to further downgrade their stock forecast. As it turns out, firms like JP Morgan aren't that interested in sales numbers after all, as the investmant stallwart upgraded both domestic automakers to "overweight". The reason for Wall St.'s optimism has a lot more to do with the UAW and the current feeling that the union will finally grant concessions in upcoming contract talks, including the possibility that the union will take on responsibility for retiree benefits. JP Morgan points out the obvious that savings from oppressive union contracts would help the each automaker's bottom line, though the cash influx could take 12-18 months to bear fruit. The General, whose stock was $18/share about 18 months ago, has received an adjusted target of $50 per share, which is still almost 50% better than it was just a few weeks ago. It looks like the folks over at JP Morgan haven't talked to to Jim Cramer lately.

Most don't want an upgrade to "overweight", but in the stock world, it's a good thing. This is good news for GM and Ford investors, but we don't even want to imagine the fallout if the big-time concessions don't end up happening.

[Source: Detroit News]

While analyzing Ford's financial prospects, Himanshu Patel, an automotive analyst for JP Morgan, cut Ford's rating to 'underweight', meaning he predicts the company will underperform financially over the next six months.

But his reasoning is the significant part: Patel believes General Motors' upcoming new Chevrolet Silverado and GMC Sierra will seriously erode sales of Ford's cash-cow F-Series.  Since Ford's full-size pickups make up 26-percent of the Blue Oval's overall sales, the second largest domestic arguably has reason for concern.

"We always monitor the competition," said Ford spokeswoman Becky Sanche "...we have plans to continue to lead the full-size pickup truck segment."

More details of Patel's analysis can be found at the link.

[Source: Detroit Free Press, Ford Motor Company]