General Motors Co. was given the same credit rating as Ford Motor Co. from Fitch Ratings, which said the largest U.S. automaker has improved its balance sheet as it plans an initial public offering to pare government stakes, Bloomberg reported.

GM was given an initial BB- issuer default rating, the same as Dearborn, Michigan-based Ford, Fitch said in a statement today. The rating for Detroit-based GM, 61 percent owned by the U.S. government, reflects its “strong liquidity position, low leverage, improved cost structure and increasingly competitive product portfolio,” wrote Stephen Brown, a Fitch analyst.

“Although they have similar ratings, you sort of get to them from different paths,” Brown, who is based in Chicago, told Bloomberg in a telephone interview. “GM doesn’t have a whole lot of debt, but they have very large pension obligations. Ford’s pension obligations are significant, but they’re lower than GM’s by quite a bit. But Ford has a lot of debt.”

GM emerged from bankruptcy in July 2009 having received $50 billion in federal aid. GM and the U.S. Treasury aim to hold an $8 billion to $10 billion IPO in November, two people familiar with the plans said last month.

The company’s pension plans were underfunded by $27 billion through 2009, Fitch said. Ford’s pensions were underfunded by about $6.1 billion through last year, down from $16 billion in 2008, Fitch said in an Aug. 6 report. Fitch raised its rating on Ford in that report two steps to BB-, three levels below investment grade.

NEW YORK – Ford Motor Co. will regain an investment-grade credit rating sooner than the company expected, CEO Alan Mulally said Wednesday.

Ford, which borrowed more than $23 billion in 2006 before credit markets froze, is “paying the money back now, and we’re going to be back to investment grade a lot sooner than what we thought,” Mulally said at an event with the Wings Club, an aviation group in New York, reported Bloomberg.

Since arriving from Boeing Co. in 2006, Mulally has revived Ford by expanding the namesake brand and improving vehicle quality. The automaker earned $4.7 billion in the year’s first six months, its largest first-half profit since 1998.

Ford’s finance arm, Ford Motor Credit Co., sold $1 billion of five-year notes Tuesday at interest rates that signal its investment-grade rating may be restored, said Greg Petryszyn, a fixed-income analyst at Minneapolis-based Thrivent Financial.

Standard & Poor’s raised the second-largest U.S. automaker’s credit rating last month two steps to B+, the fourth level below investment grade. Ford lost its investment-grade rating in 2005. Moody’s Investors Service rates Ford B1, also the fourth level below investment grade.

Sales of redesigned models such the Taurus and Fusion sedans have helped boost the automaker’s U.S. sales 17 percent this year through August, doubling the industrywide gain of 8.4 percent.

Mulally said in an interview that Ford hasn’t provided a specific time frame for returning to investment grade, which is level Baa3 or above at Moody’s and BBB- at S&P.

“We’re going to be solidly profitable and generate positive free cash flow, and we will continue to improve our balance sheet and get back to investment grade,” he said.

Chief Financial Officer Lewis Booth said in March that Ford was “some years away” from regaining an investment-grade rating.

Ford Motor Credit is the second-biggest issuer of high- yield corporate debt this year, behind Ally Financial Inc., the auto and home lender majority owned by the U.S. Treasury, Bloomberg data show.

Ford Motor is planning to win back its investment grade credit rating that it lost in 2005, The Wall Street Journal reported, citing people familiar with the situation.

Ford, the only U.S. carmaker that did not receive a government bailout during the financial crisis, aims to get back the investment grade rating in 2012, or by the end of 2011, the sources told the paper.

An investment grade rating usually means a company can borrow money at lower interest rates.

In the second quarter, Ford retired $7 billion of debt, lowering annualized interest costs by more than $470 million. Ford ended the quarter with $27.3 billion in automotive debt.

Ford expects to be solidly profitable this year, but it borrowed more than $23 billion in late 2006 to fund its turnaround, leaving it with a far heavier debt load than the post-bankruptcy GM and Chrysler.

Ford avoided the bankruptcies that engulfed GM and Chrysler but supported its rivals in their requests for U.S. government funding that also helped to prevent a collapse of the auto parts supply base.

Ford could not immediately be reached for comment outside regular U.S. business hours.

DETROIT – Ford Motor Co. sees “great options” to improve its balance sheet and return to an investment-grade credit rating as its financial results continue to strengthen, CEO Alan Mulally said.

Mulally affirmed forecasts for a “solid profit” in 2010 and said cost savings from using common global platforms, growing market share and improving pricing would deliver greater profits in 2011 and beyond, Reuters reported.

“The No. 1 strategy we’re pursuing is to continually improve operational performance. That allows us to accelerate [balance sheet] improvement. It gives great options to do that,” Mulally told analysts in a meeting that was webcast.

“We are going to accelerate improvement to get back to investment grade, which is our intent, as quickly as we can,” he said.

Ford was first lowered to junk status in 2005 by both Moody’s Investors Service and Standard and Poor’s. Earlier this month, Moody’s raised Ford to B1, its fourth level below investment grade. Standard & Poor’s last month kept its B-minus credit rating on Ford, six notches below investment grade, but revised its outlook to “positive” from “stable.” That indicates better than a one-in-three chance of upgrade during the next year.

The No. 2 U.S. automaker, which has divested Jaguar, Aston Martin and Land Rover and is completing the sale of Volvo, continues to evaluate its remaining brands, Mulally said, while declining to comment on the future of its struggling Mercury brand. Sources familiar with the matter said Thursday that Ford is considering a plan to drop Mercury, which Henry Ford’s son, Edsel, created during the Great Depression. Mercury’s product and marketing investment has decreased in recent years, and its sales have plunged 74 percent since 2000.

“We continue to look at our portfolio and brands as any good business does, but we have nothing new to add today,” Mulally said.

Toyota Motor Corp., the world’s largest carmaker, will have insufficient profit to warrant an upgrade of its credit rating this fiscal year, according to Moody’s Investors Service, Bloomberg reported.

Toyota, which Moody’s rates the highest among global carmakers at Aa2, needs an annual operating profit of 1 trillion yen ($11 billion), more than triple its outlook for this year, before it can be considered for a higher rating, Tadashi Usui, senior analyst at the credit rating company, said in an interview in Tokyo. It also needs an operating margin of 5 percent, he said.

Moody’s and Standard & Poor’s began cutting Toyota’s rating last year after the carmaker posted the first of three straight quarterly losses. Usui said recalls of more than 8 million Toyota vehicles worldwide in the past year have damaged the company’s reputation, threatening to slow an earnings rebound.

“I cannot say confidently that Toyota’s operating profit will recover smoothly,” Usui said.

Toyota fell 1.9 percent to 3,300 yen as of the 12:50 p.m. trading break in Tokyo, while the benchmark Nikkei 225 index fell 3.1 percent. The automaker has declined 15 percent so far this year.

Operating profit may increase 90 percent this fiscal year to 280 billion yen, from 147.5 billion yen in the 12 months ended March 31, the carmaker said May 11. The forecast is almost 90 percent smaller than the record 2.27 trillion yen Toyota posted in the year that ended in March 2008.

Moody’s downgraded Toyota’s credit rating last month to Aa2, its third highest level, with a negative outlook, from Aa1. The automaker lost its top Aaa rating in February 2009.

TOKYO – Toyota Motor Corp.’s credit rating was cut today by Moody’s Investors Service, and Fitch Ratings said it may also downgrade the world’s biggest carmaker as recalls of more than 8 million vehicles ravage profit, Bloomberg reported.

The rating was reduced to Aa2, the third-highest grade, from Aa1, according to a statement from Moody’s, which stripped Toyota of the top Aaa rating last year. Fitch will examine the company’s creditworthiness and a downgrade is a “possibility,’ senior analyst Jeong Min Pak said in an interview.

Toyota faces at least 180 consumer and shareholder lawsuits stemming from recalls due to unintended acceleration and may suffer $2 billion in lost sales and warranty repairs. The company recalled its Lexus GX 460 SUV and agreed to pay a record $16.4 million U.S. fine this month, further tarnishing its reputation for safety under President Akio Toyoda.

Increased costs related to the recalls “will hurt Toyota down the road,” said Pearlyn Wong, an investment analyst in Singapore at Bank Julius Baer Co., which manages about $350 billion worldwide. “Litigation costs are very hard to model.”

Toyota faces a “material risk” that its operating profit margin will remain well below what is appropriate for its rating “until 2012 at the earliest and possibly beyond,” Moody’s analyst Tadashi Usui wrote.

Fitch will examine Toyota “closely” in the next six months, said Jeong Min Pak, a senior director at the company, by phone from Seoul.

Separately, Moody’s also downgraded Denso Corp.’s credit rating to Aa3 from Aa2. Denso, which is 22.54 percent owned by Toyota, produces electronic and other parts for automobiles.