Fitch Ratings on Thursday upgraded its rating of Ford Motor Co. to "BB+" from "BB" with a positive outlook to achieve the last notch below investment-grade status in the wake of successful ratification of a new labor agreement.

"The upgrades to Ford's ratings reflect the automaker's strong financial performance and continued debt reduction through the first nine months of 2011, as well as the recent completion of the United Auto Workers labor agreement," the ratings agency said in a report.

Auto sales are still slow to recover, but Fitch cites Ford's "continued net pricing strength" and a lower cost structure. That should allow the automaker to generate strong margins and free cash flow in a weak market while continuing efforts to reduce its debt load to $10 billion by 2015, reported The Detroit News.

The move does not come as a surprise as rating agencies in recent months said they would look at upgrading Ford's credit status upon successful completion of its labor negotiations.

Ford Chief Financial Officer Lewis Booth said earlier Thursday he thought the labor contract would be favorably received by ratings agencies. Ford is hoping to return to investment-grade status again soon, but achieving it "is not an absolute necessity to pay dividends," Booth told investors.

"Our shareholders have been very patient. It would be nice to get investment grade ahead of time, but that's not in our control," Booth said.

Barclays Capital on Thursday said contract ratification paves way for a quarterly dividend of 8 cents.

"With the contract behind it, Ford is likely to consider instituting a regular dividend," said Barclays analyst Brian Johnson. He expects Ford to pay a dividend for 2012 of 36 cents, beginning with an 8-cent dividend in the first two quarters of 2012, ramping up to 10 cents per quarter in the second half and 55 cents by 2015.

But Ford could announce a dividend when third-quarter results are released next Wednesday, Johnson said.

Fitch expects Ford's rating could be upgraded in the next 12 to 24 months, but said reaching investment grade — "BBB-" would require financial assurances Ford is strong enough to withstand the cyclical pressures on the auto industry.

The agency does not want to assign investment-grade ratings to Ford unless it is reasonably confident the automaker has the liquidity, cost structure and profit-generating potential to maintain the status even in a period of economic stress.

But elevating Ford to "BBB-" or higher is likely if the company continues with its current business plan, Fitch said.

"We continue to make progress on our plan, and we are pleased with this positive step," said Ford spokesman Todd Nissen. "Ultimately, the credit rating agencies determine when we return to investment grade. Our job is to stay focused on making progress on our plan."

Mark Fields, Ford president of The Americas, said Thursday that Ford's mid-decade outlook remains intact with the terms of the new labor agreement.