Credit ratings agency Moody's Investors Service has upgraded its ratings on Ford Motor Co. and its financing arm, saying the automaker's restructuring efforts should lead to better financial performance.

Moody's raised Ford's corporate family and probability of default ratings to one notch to "B1" from "B2." Moody's also upgraded Ford Motor Credit Co.'s corporate family and senior debt ratings one notch to "Ba3" from "B1." The ratings remain non-investment grade.

The upgrades, which cover several other ratings as well, affect $65 billion in debt. The outlook for the ratings is stable, Moody's said.

"The upgrade of Ford's long-term ratings anticipates that the company's restructured business model, supported by recovering demand in the US market, will generate significantly improved operating and financial performance," Moody's wrote.

Moody's also cited a "robust" plan for new product launches, a more disciplined approach to production and incentive levels and cost savings from a new agreement with its union.

"The stable outlook reflects Ford's ability to adequately contend with the risks and challenges it may face," the ratings agency continued.

Ford, the second largest U.S. automaker, has seized market share from rivals over the last year, helped by well-reviewed new models and consumer goodwill from not taking federal bailouts, unlike rivals General Motors Co. and Chrysler Group LLC. Toyota also has been weakened by a series of safety recalls.

At its annual shareholder meeting last week, CEO Alan Mulally reiterated that he expects the company to be "solidly profitable" in 2010.