Ford's credit rating has been raised from Ba2 to Baa3 by
Moody's, the second ratings agency to restore the Detroit car
maker's investment grade rating, meaning that Ford's seven-year
period of paying higher junk bond interest rates is over.
What does that mean in the really real world? Well, Ford can
now reclaim its blue oval logo, as well as billions of dollars'
worth of other assets that it pledged as collateral on $23.4
billion in loans that it borrows back in 2006.
That is a massively important. Any marketing major will tell
you that branding is everything and the Ford logo is known the
world over. To gain control of that back is huge for the
In addition, and perhaps more important, Ford will now be
allowed to borrow money at lower interest rates due to the fact
that it has a strong balance sheet.
"We knew we could get this done," CEO Alan Mulally told
reporters. "This is a very exciting day for everybody associated
with Ford, our employees, our dealers, our suppliers. It's way up
there on the highlight film for sure."
Bill Ford appeared on CNBC on Wednesday, and said that
yesterday was a great day for Ford, especially getting the oval
When quizzed on the subject of a difficult European market,
Bill Ford said, "Despite the troubles in Europe, we are doing
exceptionally well and hitting out targets."
When asked if it is frustrating to see analysts remain bearish
on the company, he said, "If we continue to hit out numbers,
we'll be just fine. It's hard to predict when investors will like
or dislike a company but if you get the basics right, eventually
people will notice."
Moody's decision comes less than a month after Fitch did
pretty much the same thing, and it provides the cherry on the
cake after what has been an awesome 12 months for Ford. Mulally
has pulled the company up from the depths.
When Ford borrowed that $23.4 billion, Mulally called it "a
little home improvement loan", and people gasped. Today, he will
feel vindicated. Ford has surged since then thanks to brutal cost
cutting exercises and the introduction of some well-received
vehicles like the Fiesta subcompact, a new Ford Focus, and some
excellent work in the area of fuel efficient technologies.
Bill Ford said that, even in the company's darkest days, he
always felt that they would turn things around. This week, he was
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