Weekend Economists Salute the 99% September 26-28, 2014

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25. Ford Due for Ratings Boost as Profit Returns to 1999 Level: Cars

http://www.bloomberg.com/news/2014-09-26/ford-due-for-ratings-boost-as-profit-returns-to-1999-level-cars.html

Ford Motor Co. (F)’s profit topped $7 billion in 2013 just as it did back in 1999 amid surging demand for Explorer sport-utility vehicles and F-150 pickups. Yet five years into its recovery, Ford’s credit ratings remain one level above junk -- six notches lower than they were back in the SUV boom of 1999.

Ford’s credit profile is as good or better than it was 15 years ago, according to Joel Levington, a Bloomberg Intelligence analyst. Even so, the second-largest U.S. automaker is viewed as riskier than many global competitors, such as Honda Motor Co. (7267) and Nissan Motor Co. (7201) Standard & Poor’s Ratings Services now rates Ford the same as General Motors Co. (GM), which it elevated yesterday to the lowest investment grade level.

“If I was Ford or one of their bondholders, I’d be scratching my head,” Levington said in an interview.

Compared with 1999, Ford’s market capitalization is larger, its dividend costs lower, and the carmaker said it will cut automotive debt to $10 billion as soon as next year, equaling its obligations of a decade and a half ago.