New York: Ford's credit rating was lifted to within one level of investment grade on Friday, making it cheaper for the automaker to borrow, after it secured a new contract with workers.
Standard & Poor's Ratings Services raised Ford two levels to "BB+" from "BB-," saying the agreement will allow its North American operations to remain profitable.
Ford Motor Co shares rose 48 cents, or 4 percent, to USD 12.19 in early afternoon trading.
The agency said strong performance in North America has helped Ford generate global profits in the past two years. The new 4-year contract with the United Auto Workers "will allow for continued profitability and cash generation in North America," it said.
The union, which represents 41,000 Ford employees, approved the contract on Wednesday. It includes signing bonuses but no annual pay increases, and it will let Ford hire more
workers at lower wages.
Ford executives said it will raise labour costs by less than 1 percent each year, USD 280 million this year and USD 80 million a year after that. Fitch Ratings upgraded Ford on Thursday, also to within one level of investment-grade status.
Moody's Investor Service has also said it's reviewing its below-investment grade ratings for the automaker.
Ford's credit sank to so-called junk status in 2005, when it was deeply in debt. It borrowed USD 23 billion in 2006 to get through the recession and fund a huge restructuring. The company had USD 14 billion in debt as of June 30.