Posts Tagged ‘detroit bailout’

The Top Ten Auto Stories of 2009

Bankruptcies, bailouts, recalls, oh what a bad year it was!

by Paul A. Eisenstein on Dec.30, 2009

Brother, can you spare a dime? The jet-setting Detroit Three at hearings: left, fired GM CEO Rick Wagoner, ex Chrysler CEO Bob Nardelli, middle, Ford's surviving CEO Alan Mulally, right.

Every December, a group of auto scribes gathers together to share some good cheer and see how we did at predicting the events of the unfolding year. To be honest, even the best of the group failed to come close to calling the big stories of 2009.

No surprise, really, when you consider the strange twists and turns the auto industry has taken during the last 12 months.  Even the best fiction writers would have had trouble scripting this plot.

Sure, there were signs that the auto industry was slumping, and that the Detroit’s Three were in trouble, but having both General Motors and Chrysler go bankrupt?  And the U.S. government become majority owner of GM, with Italian automaker Fiat controlling Chrysler?  And what about Toyota?  Twelve months ago, most of us were writing about the fact that the giant Japanese automaker seemed certain to become the world’s largest automaker, finally overtaking troubled GM.  So, who could have begun to suspect all the problems that would follow for Toyota in 2009?  And what about the unexpected rise of the Chinese?

Top Ten!

But I’m getting ahead of myself.  The fact is, there were so many big stories in 2009 it may be impossible to come up with a fair, accurate and complete list of the 10 Top Auto Stories that everyone will agree on.  But I’ll try.

And TheDetroitBureau.com would like to encourage readers to come up with the stories they would add to the list.  Just go to the Comments section at the end of this story.

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Ford Debt Rating Raised, But Still Junk

More good news for Dearborn maker.

by Joseph Szczesny on Sep.08, 2009

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford Motor Co. got some good news last week as Moody’s Investor Service raised its rating of the company’s corporate debt for the first time in 14 years.

However, Moody’s continues to rate Ford as junk, or below investment grade, but changed the “Corporate Family Rating of Ford to Caa1 from Caa3. Moody’s also raised the company’s Speculative Grade Liquidity (SGL) rating to SGL-3 from SGL-4.

Moreover, Ford’s rating outlook was changed to stable from negative. In a related action, Moody’s placed the Caa1 senior unsecured rating of Ford Motor Credit Company LLC on review for a possible upgrade.

It was of course the rating agencies that said mortgage backed securities and other derivatives were AAA rated or virtually risk free, which was at the heart of the collapse of the global financial markets that led to the Great Recession, which is ongoing. With U.S. unemployment growing to almost 10% in August, the economy continues to shed workers, as businesses return to profitability by eliminating middle class jobs or moving them offshore.

“The rating actions reflect Moody’s belief that after a period of intensive restructuring of its operations and balance sheet, Ford’s business viability has significantly improved. The positioning of the CFR rating at Caa1 balances the substantial achievements the company has made in restructuring its operations and rebuilding competitiveness against the expectation that even with these improvements meaningful earnings and cash flow generation will not be evident before 2011,” said Moodys in a statement.

Translation: more red ink until two years from now.

It's Debt Free!

It's Debt Free!

“Moody’s believes that Ford has adequate liquidity to bridge itself until 2011 as reflected in the upgrade of the SGL rating to SGL-3.”

Ford has been receiving some good news, lately, but there had been some concern about the fact that the company, by not going into bankruptcy, like General Motors and Chrysler, remained saddled with a significant amount of debt.  But while Ford does continues to carry substantial debt on its balance sheet, the upgrade reduces the automaker’s borrowing costs, freeing up cash for other uses such as product development.

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