Friday, September 4, 2009

Ford Motors On

A bit of good news for the American auto industry yesterday: On the heels of the success of the Cash for Clunkers program, which has helped fuel a steady rise in the sales of Ford cars, Moody's announced it was raising its credit rating for Ford Motor Co. While that's certainly a step in the right direction, as with so many developments in the recovery, it's a step that looks good only because things have been so bad.

Ford's new credit rating is Caa1, up from Caa3.The old rating was Caa3, the kind of assessment given to junk bonds. The rule of thumb is that investors should expect some degree of loss on Caa3-rated bonds. The new rating, Caa1, is still below investment grade: The bonds will still have to move up one more step, to B3, in order to have what Moody's calls "generally poor credit quality."

It's a positive for Ford, the only major American automaker that was able to avoid bankruptcy. On the other hand, it's a sign of how awful this crisis has been when the mighty Ford Motor Co., once one of the world's most powerful corporations, is celebrating the fact that its bonds are now slightly less junky than before.

No comments:

Post a Comment