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and GM were both upgraded by Moody's on Thursday, reflecting the signing of new contracts with the United Auto Workers.

For Ford, the upgrade was the second in the past week.

Moody's said it raised the corporate family ratings of Ford, Ford Motor Credit Company and GM to Ba1 from Ba2. In both cases, Moody's said the outlook is positive.

Europe's financial situation will be a key factor in determining whether to further upgrade Ford, said Bruce Clark, Moody's senior vice president, in a prepared statement.

"Ford is doing a credible job of managing the operating and financial aspects of its business, and this is reflected in credit metrics that are very strong for the Ba1 rating level," Clark said, in a prepared statement.

"One of the hurdles in getting to an investment grade rating is the difficulty in gauging just how bad things could get in Europe," he said. "The situation there won't be completely sorted out during the near term. (But) if there is any improvement in Europe's outlook, we could take another look at the rating."

Clark also said that another GM upgrade is possible. "GM's competitive position, credit metrics and liquidity profile are quite strong for the Ba1 rating level," he said. "If GM continues to successfully execute its operating plan and maintains its 'fortress balance sheet' financial strategy, there is potential for further improvement in the rating."

Moody's said GM's "credit profile is supported by its increasingly competitive North American product portfolio and its strong position in high-growth Asian markets -- particularly China." Challenges include "execution risks associated with maintaining a globally competitive product portfolio," improvement in Europe and the U.S. Treasury's eventual disposition of its 27% ownership in the company.

Last week, Standard & Poor's

raised Ford's credit rating to BB plus from BB minus

Also, Ford CFO Louis Booth said Wednesday that the company will no longer wait for its credit rating to reach investment grade status to consider whether to

restore its dividend.

Moody's also raised the ratings of Ford's secured credit facility to Baa2 from Baa3, Ford's senior unsecured debt to Ba2 from Ba3 and GM's secured credit facility rating to Baa2 from Baa3, with a positive outlook.

-- Written by Ted Reed in Charlotte, N.C.

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