Ford Motor Co.’s (NYSE: F) stock price hit a 5-year high after Moody’s Investors Service upgraded the automaker’s credit rating. The company’s bonds also gained after the upgrade.
Ford’s shares rose 61 cents or 4.5% for the day to close at $14.10 on the NYSE, its highest close since January 12th 2005. The company’s $1.8 billion worth of 7.45% notes, due in 2031, rose 2.5 cents on the dollar to 92.5 cents, according to Trace, which is the bond-price reporting system of the Financial Industry Regulatory Authority.
Moody’s raised the Dearborn, MI based company’s corporate credit rating one step, up to B2, the fifth level below investment grade, from B3, according to a statement made by the ratings company on Tuesday. The upgrade also included its Ford Motor Credit finance unit and will affect about $65 billion in debt.
“Ford clearly has a much more robust and competitive business model,” said Bruce Clark, Moody’s senior vice president, said in the statement. “The key issue we’re assessing is the degree to which this pace of improvement could be delayed by things like a slowdown in demand or an escalating use of incentives by competitors.”
“The stock trading up is just confirmation that Ford is doing all the right things,” said Shelly Lombard, a debt analyst at Gimme Credit LLC in New York to Business Week. “Toyota is stumbling and GM still isn’t on track yet, which is all positive for Ford.”
