Ford Motor Co., now ranked as investment grade by all major credit-ratings companies, said a gradual rise in interest rates would boost its balance sheet and help offset the higher costs to finance car sales.

Rising interest rates are having a "hugely favorable effect" on Ford's pension obligations, Chief Financial Officer Bob Shanks said today in an interview. Shoring up the pension shortfall, which ratings companies treat as debt, would blunt the impact of higher costs of funds for Ford Motor Credit, the Dearborn, Michigan-based company's lending unit.

"On the assumption that it's sort of a progressive increase to normalized rates, consistent with an improving economy, I think we'll be fine," Shanks said in Bloomberg's Detroit bureau. "Overall, that's good news for the company."

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