Chief Executive Officer Alan Mulally moved closer to reclaimingFord Motor Co.'s valuable blue oval logo, headquarters building andMustang trademark yesterday, as Fitch Ratings raised theautomaker's credit rating to investment grade.

Fitch had ranked the second-largest U.S. automaker's debt asjunk since December 2005. With yesterday's upgrade, Ford now needsonly Standard & Poor's or Moody's Investors Service to followsuit to regain control of the major assets it put up as collateralto avoid the bankruptcy that engulfed other U.S.-basedautomakers.

The higher rating “is an important milestone for the company andcan have real strategic implications on the funding side,” AdamJonas, a Morgan Stanley analyst, wrote in a note.

For Mulally, returning Ford to investment grade would remove aburden the CEO inherited when he assumed the job in September 2006.Ford's borrowing costs would shrink and it would have access tocollateral it used to obtain $23.4 billion in loans in late 2006.That gamble allowed Ford to avoid the fates of the predecessors ofGeneral Motors Co. and Chrysler Group LLC that restructured undergovernment-backed bankruptcies in 2009.

Fitch yesterday lifted Ford to BBB-, the first level ofinvestment grade, from BB+, the ratings company said in astatement. Fitch first cut Ford's rating below investment gradeDec. 19, 2005, as rising fuel prices began curtailing sales ofsport-utility vehicles and pickups that accounted for most of theautomaker's profit.

Getting Ford's blue oval logo out of hock will signify thatFord's comeback is complete, Lewis Booth, Ford's former chieffinancial officer, said in Feb. 28 interview with reporters beforehis April 1 retirement. Whenever the second ratings companyofficially upgrades Ford, Booth said he will stop what he is doingand toast the company's success.

“The psychological impact will be enormous,” Booth said ofreclaiming the company's logo. “Wherever I am in the world thatday, I shall be celebrating.”

Both remaining major ratings companies still have Ford at onelevel below investment grade. S&P rates Ford BB+ and Moody'sBa1. Fitch, in its statement yesterday, said the upgrade reflects“improved financial performance, balance sheet repair, and productportfolio improvement that have taken place over the past severalyears.”

No Retirement Plans

Fitch raised the issuer default rating of Ford and its financeunit, Ford Motor Credit, and said the outlook for both wasstable.

“Since the last recession, Ford's management has been heavilyfocused on increasing profitability, growing liquidity, loweringdebt and reducing the company's pension obligations,” Fitchsaid.

Mulally, 66, has said he has no plans to retire. ExecutiveChairman Bill Ford has that Mulally can remain CEO as long as hewants. Bill Ford was Mulally's predecessor as CEO.

“This upgrade has come at least several weeks earlier than ourcredit team had expected,” Morgan Stanley's Jonas wrote. “Ourcredit team does not expect an upgrade from Standard & Poor'swithin the next six months and thinks it is more likely that Moodymoves Ford to investment grade within the next three months.”

Ford bonds yielded 3.09 percentage points more than governmentdebt on average two days ago, according to Bank of America MerrillLynch index data. That's down from about 36 percentage points atthe peak of the credit crisis in March 2009 and compares with anaverage spread of 2.55 percentage points for bonds rated BBB, thelowest tier of investment grade.

Ford rose 0.4 percent yesterday to $11.39 at the close in NewYork. The shares gained 5.9 percent this year through April 24.

The automaker ended 2011 with its 11th consecutive profitablequarter, with fourth-quarter net income of $13.6 billion, or $3.40a share, compared with $190 million, or 5 cents, a year earlier.Ford earned $29.5 billion in the last three years after $30.1billion in losses from 2006 through 2008.

Ford resumed paying a dividend last month following a five- yearsuspension. The automaker March 14 declared a second- quarterdividend of 5 cents a share payable June 1 to shareholders ofrecord on May 2.

“This is just the natural next step for the company,” said JodyLurie, a credit analyst at Janney Montgomery Scott LLC inPhiladelphia. “The debt markets are pretty much seeing investmentgrade and have factored this in already.”

“Getting the collateral back, getting the blue oval back hasbeen a huge rallying cry and one that we all feel emotionallyconnected to,” Neil Schloss, Ford's treasurer, told reporters March15. “Investment-grade companies feel better about themselves.”

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