Ford's New Year Resolution: Get Out of Junk Status, Reduce Loan Rates

Last year, Ford Motor Company showed great improvement, as market share and profits were on the rise and there was genuine interest in the company’s products. But the picture is not yet as rosy at it might seem, as Ford is still stuck in junk bond status, which in turn makes borrowing money more expensive.

So one of the most important jobs for K.R. Kent (if not the most), Ford's new executive director of Investor Relations, will be getting the company back to investment grade credit rating. A higher credit rating could eventually translate into cheaper borrowing costs for the carmaker, that could offer more competitive incentives to customers and attractive lease terms.

Back in March last year, CFO Lewis Booth told Bloomberg that Ford had a long way before reaching investment-grade, saying the company needs to show “consistent and predictable” improvements. The fact that rival Ally Financial, the former GMAC, became a bank holding company in late 2008, makes this issue a pressing one for Ford. Since then, it has been cheaper for Ally to secure loans than Ford Credit.

“As we continue to make progress on our One Ford plan and move toward an investment-grade credit rating, we are committed to providing the investment community with authoritative and highly credible insight into our automotive business and Ford Credit,” said Booth in a recent statement.

Automotive News reports that the company was dropped by Standard & Poor's four levels below investment grade back in 2005. There has been some concern about the fact that the company, by not going into bankruptcy, like General Motors and Chrysler, remained burdened with a significant amount of debt.