DETROIT ( TheStreet) -- Ford's ( F - Get Report) fourth-quarter results may have disappointed equity analysts, but some bond analysts found something to be happy about.

On Tuesday, Standard & Poor's raised Ford's corporate credit rating to BB minus from B plus. The agency also raised the issue rating on Ford's senior secured credit facilities to BB plus and its senior unsecured debt to B plus.

"We believe that as a market recovery continues in North America, Ford's global automotive operations will generate at least mid-single-digit pretax margins and positive automotive operating cash flow (after subvention and separation payments) of at least $3 billion in 2011," S&P said.
Ford

"The outlook is positive, reflecting potential for an upgrade if the global economic recovery, U.S. labor negotiations, and Ford's own performance develop favorably during the next 12 months," the agency noted.

While Ford still has not reached investment grade (BBB minus is the lowest investment grade rating), it is still making progress in an area of critical importance, most notably because higher ratings reduce borrowing costs.

In October, Moody's raised Ford's corporate family rating to Ba2, up two levels from B1.

On Friday, following Ford's earnings report, Moody's affirmed the rating and changed the outlook to positive from stable.

Despite the upgrades, S&P analyst Robert Schulz sounded a note of caution. He said Ford's business risk profile has improved to fair from weak while its financial risk profile has improved to significant from aggressive.

Schulz said the positive outlook reflects a one-in-three chance that S&P could raise Ford's corporate credit rating again during the next 12 months.

He said risks include potential weakness in the global recovery in vehicle demand, particularly in Europe; continuing high dependence on trucks for profitability in North America and "substantial execution risk of its ongoing repositioning and expansion -- for example in China where its market share in minimal." Additionally, Ford is exposed to tough competition and rising costs for raw materials and fuel.

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

>To contact the writer of this article, click here: Ted Reed

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