Moody's raises rating on Ford, may raise Ford Credit

Moody's Investors Service on Thursday raised its rating on Ford Motor Co, saying intensive restructuring has significantly improved the automaker's viability.

The rating action affects about $25 billion of debt, Moody's said.

Moody's also said it may raise the ratings on Ford's finance arm, Ford Motor Credit Co.

"The period of greatest risk in Ford's restructuring has passed," Moody's said in a statement. Ford now has a more sustainable cost structure and it should be able to fund its cash burn until a recovery in industry demand improves earnings and cash flow around 2011, Moody's said in a statement.

Moody's raised Ford's corporate family rating by two notches to Caa1, seven steps below investment grade. It said it may raise Ford Credit's senior unsecured rating, now Caa1.

Ford, the only large U.S.-based automaker that has not restructured in bankruptcy in 2009, has been raising production targets as the government's "cash for clunkers" incentive program boosts sales.