Share prices for both Fiat Chrysler and France's Peugeot surged Tuesday after rating agency Moody's upgraded its rating on the Italian-American car maker.

Moody upgraded Fiat Chrysler from "stable" to "positive" in the first rating release on one of the two companies since they announced merger plans last week. The deal, once completed, would create one of the world's largest auto producers.

According to Italian Stock Exchange and Paris Stock Exchange respectively, in early trading Tuesday, shares for both Fiat Chrysler and Peugeot climbed around 3 percent, as investors applauded the merger plan and the endorsement of Fiat Chrysler from Moody's. Both companies' shares were trading within around 10 percent of their 52-week highs.

Since the merger is still in the works, Moody's rating only reflects the fiscal health of Fiat Chrysler, a company jointly based in Turin, Italy and Detroit in the United States of America. It comes after Ministry of Transport figures released Monday showed Fiat Chrysler's car sales in Italy inched lower in October compared to October 2018, even as the overall market for new cars in Italy grew 6.7 percent over the same period.

The new rating is Ba1, the highest non-investment grade rating. Moody's said in a statement further upgrades were possible if the merger process moves forward smoothly.

The merger deal could be completed as soon as the first quarter of next year, though there are many details to work out.

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