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Discussion Starter · #1 ·
Morningstar rates Ford investment grade
Reuters

December 16, 2010

  • Moody's rates Ford two rungs to investment grade
  • Fitch rates Ford three rungs from investment grade
  • Standard & Poor's: Ford four rungs to investment grade

DETROIT, Dec 16 (Reuters) - Morningstar Equity Research raised Ford Motor Co's (F.N) credit rating by two notches to its lowest investment grade, citing improving profitability and the automaker's reduced debt.

The automaker remains at least two rungs down on the ratings ladders at the three major agencies.

"Management's laserlike focus on paying down debt in an effort to achieve investment-grade ratings from the nationally recognized statistical rating organizations has resulted in the firm moving close to a zero net debt position," Morningstar said in a report issued on Wednesday.

The company's executive chairman, Bill Ford, this week said that paying off debt and showing a profit in 2010, with expectations of a stronger 2011, indicate that Ford will reach investment grade standing quicker than many observers think.

"It's looking more realistic sooner rather than later," Ford said regarding upgrades by the agencies.

Morningstar raised Ford to BBB-, its lowest investment grade rating.

Ford remains four notches below investment grade in ratings by Standard and Poor's, three steps down at Fitch Ratings at BB-, and two notches below investment grade at Moody's, which rates Ford at BA2.

Morningstar's report says Ford's success in driving profit has been better than the agency had expected.

Also this week, Ford CEO Alan Mulally said the company has moved from trying to survive several years ago to two straight years of gains in the U.S. auto market.


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Discussion Starter · #4 ·
Pardon my ignorance but could someone explain what exactly "investment grade" means? Thanks.
In very simple terms, which are the only ones I got since I am not an expert, investment grade means that these rating agencies deem a particular company's bond to be a worthy investments and recommend the purchase of their bonds. The effect is that the more demand there is for these bonds the less interests the company has to pay to lure investors.

On the other hand these rating companies are the same that gave AAAA ratings to the bonds put together by the banks with all the bad mortgages they were giving so in MY opinion the only value of these rating is in their effect in the investors that still trust them, but by themselves for my the are worth &/#%#.
 

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^ I'll give it try, 3Mach1 (tho even less of an expert)
the ratings are like a report card grade of the ODDS of how much of a GAMBLE putting your money into a given company is

AAA = (practically) sure thing - ie you'll likely get your money back with some increase
"junk" rating = sucker bet/extreme long shot - good chance of losing everything
(tho as said, there's no guarantee the rating is dependable)

[rant]
a guy I know who PLAYS the market says that "INVESTING" in the real sense of the word is no longer even possible - for a number of reasons but primarily because 'program traders' (large super-fast computerized trading companies) +insiders +fat cats, control the market (ie the prices of stocks/bonds) and they not only over-react to current events but deliberately manufacture up-swings and down-turns so THEY can create profits for themselves
at the expense of the little-guy
 

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Discussion Starter · #7 ·
Just a point of clarification . . . these ratings are in relation to bonds issued by a corporation to fund their debt, not to their stock which rating would be in conflict with the stock trading activity.
 

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Probably not for a couple of years. By lowering there debt, they will increase there ratings. A higher rating = lower interest rate on there debt. Also when they took out the big loan in 2006 they put everything up for collator, I would think they want to get out of this situation.

George
 
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