Strong U.S. Performance of Ford, GM Wins S&P’s Favor

Standard & Poor's Ratings Service has revised its credit outlook for General Motors Co. to positive from stable and says the company's rating could be boosted to investment grade by the end of 2014.

Fitch Ratings also changed its GM outlook to positive last week. Both agencies currently rate the company BB+, the top rung of junk-bond territory.

S&P also raised its rating for the debt of Ford Motor Co. and its finance arm by one notch to BBB-, the lowest step of investment grade. The firm is the last major U.S. ratings agency to restore Ford's rating to that level. Fitch Ratings and Moody's Investors Service did so in April and May, respectively.

S&P attributes its brighter view of Ford and GM in part to their robust performance in the rising North American car market. Last month U.S. light vehicle sales surged 17% year over year to 1.5 million units the highest level since May 2007. August deliveries jumped 15% to 257,800 vehicles at GM and 12% to 220,400 units at Ford.

S&P adds that both companies are better positioned to capitalize on the sales rebound because of their North American restructuring during the recession. The agency cites their prospects for improving results in China and Europe.

Ford and GM tumbled to junk-bond status in 2005.