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RENEE MONTAGNE, HOST:
And I'm Renee Montagne.
After all the reports about massive debts and credit downgrades, we have a story this morning of a credit upgrade. The ratings agency Fitch upgraded Ford.
INSKEEP: The company was at junk bond status, meaning a loan to Ford was considered a major gamble. Now, it's been moved to investment grade, the lowest investment rating: BBB minus.
MONTAGNE: While that doesn't sound like a big step, it is another sign of a turnaround for the U.S. auto industry, a turnaround that's evident both at home and abroad.
We begin with NPR's Sonari Glinton.
SONARI GLINTON, BYLINE: In the middle of the last decade, Ford was in deep trouble. To get out of it, the company pledged every single asset it had to get what's described as the biggest home improvement loan in history: $23.5 billion. Every single asset - right down to the blue oval that says "Ford" - was used as collateral. The difference between 2006 and now, for Ford, is the difference between...
MICHELLE KREBS: Near death to flourishing life.
GLINTON: Michelle Krebs is a senior analyst with Edmunds.com.
KREBS: There was great question about whether Ford was going to survive.
GLINTON: That money it borrowed also helped Ford survive the economic collapse. Plus, Ford went out and got a highly regarded - and highly compensated - CEO, Alan Mulally. Krebs says Ford took that money and focused on its products - its cars and its trucks.
KREBS: Every time Ford came out with a new product - a new Ford Focus, a new Ford Fiesta, the new Ford Explorer - that cost hundreds of millions of dollars in engineering costs, in buying the parts, in retooling the factory so that it could make this new model.
GLINTON: And every time the company comes up with a new model, it essentially borrows money to do it.
Jim Gillette is with IHS Automotive. He says now that the ratings agency Fitch has upgraded Ford's credit, it can borrow at lower rates.
JIM GILLETTE: Everything's a little bit cheaper now for Ford, so that's going to give them a little more flexibility in pricing power when it comes to the end consumer, and it's going to give them more capability of investing in new technologies and new models to take out to the marketplace.
GLINTON: In the last half-dozen years or so, cars like the Ford Fusion and the Ford Focus have met with approval. The Fusion is one of the best-selling cars in America, and that hasn't happened for Ford in more than a decade.
Gillette says it may be premature, though, to break out the champagne over the Fitch upgrade.
GILLETTE: It's an upgrade that takes you right from the edge of being a junk bond company or a high-yield company, into being investment grade. So it's still on the edge. In other words, the work is not over yet. Ford has to continue to pay down its debts.
GLINTON: Part of the work that's left is to get back full ownership of the iconic blue oval, the one Ford put up to secure loans. That can't happen until another ratings agency upgrades its status, and Ford won't have to use its most prized possessions as collateral anymore. As a Ford executive says, that will be the real symbol of a turnaround.
Sonari Glinton, NPR News. Transcript provided by NPR, Copyright National Public Radio.