The only United States car maker not receiving a government bailout in 2009 was Ford (NYSE: F) Motor Company. It proved to be a strategic move, as the company experienced increased car sales from consumers who wanted to support the only car company not receiving a government handout. Sales for Ford in 2010 are up 22% over the same period from last year, which is higher than both General Motors Co and Chrysler Group LLC’s sales for the same time period. Ford reports a profit of $7.3 billion since the beginning of 2009.

Now, Ford is getting help from both the US government and other governments around the world to pay off debts to boost it’s company credit rating. It’s used government loan guarantees repeatedly, as well as government-backed loans for investing in the growth of the company. Ford pays back their debts ahead of schedule and uses it’s own cash reserves to pay down any privately borrowed funds.

The goal is to improve the investment-grade credit rating by the end of 2011. A higher credit rating will keep the company’s cost of borrowing money more affordable. “If we can take advantage of attractive interest rates, we will,” Ford spokesman Mark Truby said.

In 2006, Ford kept itself from having to declare bankruptcy by borrowing $23.5 billion. This is in steep contrast to other car makers, who have relatively little debt due to the United States funding they received to reorganize their companies. Ford has been paying down it’s debts before or on schedule, including a $3 billion pre-payment made on a $7.5 billion revolving loan made in April of 2010. They also paid $3.8 billion to the retired worker health-care benefits fund ahead of schedule. The company estimates annual interest savings of more than $470 million for paying debts ahead of schedule.

President Barack Obama toured Chicago’s Ford plant and agreed to a $250 million dollar loan guarantee from the U.S. Export-Import Bank to finance Ford’s desire to export their cars to Canada and Mexico. The U.K government guaranteed a $572 million dollar loan for Ford’s initiative to build vehicles that cause less pollution and increase fuel-efficiency.

Due to Ford’s improved performance, the company is experiencing less loan guarantees than competitors who show more of a need for the loans. In July, the German government rejected a loan guarantee request made by Ford through the EIB. The funds would have been used to improve a Ford plant in Cologne, but the request was denied because Ford has been doing well.

“Virtually all of our competitors have received these EIB loans, so we believe strongly we are being disadvantaged through this decision,” Ford of Europe spokesman John Gardiner said.

The company goal to increase it’s investment credit grade is to enable more funding to further grow and improve the company.

Resource:
http://online.wsj.com/article/SB20001424052748703589404575417491742322262.html