Morningstar rates Ford investment grade

* Moody’s rates Ford two rungs to investment grade

* Fitch rates Ford three rungs from investment grade

* Standard & Poor’s: Ford four rungs to investment grade

DETROIT, Dec 16 (Reuters) - Morningstar Equity Research raised Ford Motor Co's F.N credit rating by two notches to its lowest investment grade, citing improving profitability and the automaker's reduced debt.

The automaker remains at least two rungs down on the ratings ladders at the three major agencies.

“Management’s laserlike focus on paying down debt in an effort to achieve investment-grade ratings from the nationally recognized statistical rating organizations has resulted in the firm moving close to a zero net debt position,” Morningstar said in a report issued on Wednesday.

The company’s executive chairman, Bill Ford, this week said that paying off debt and showing a profit in 2010, with expectations of a stronger 2011, indicate that Ford will reach investment grade standing quicker than many observers think.

“It’s looking more realistic sooner rather than later,” Ford said regarding upgrades by the agencies.

Morningstar raised Ford to BBB-, its lowest investment grade rating.

Ford remains four notches below investment grade in ratings by Standard and Poor’s, three steps down at Fitch Ratings at BB-, and two notches below investment grade at Moody’s, which rates Ford at BA2.

Morningstar’s report says Ford’s success in driving profit has been better than the agency had expected.

Also this week, Ford CEO Alan Mulally said the company has moved from trying to survive several years ago to two straight years of gains in the U.S. auto market.

“We have now turned a corner and we are growing the business,” Mulally said. “We are profitably growing the business and this has not happened in many many years. You can imagine how the conversation has switched from surviving to what do we do to further improve our competitiveness.”

Ford posted losses totaling $30 billion from 2006 through 2008, but is has shown profits in the last six quarters.

Ford shares closed Thursday up 1.3 percent at $16.77. That is up from just over $9 a year ago. (Reporting by Bernie Woodall; Editing by Tim Dobbyn)