Ford Sells $1.25 Billion of Bonds After Rating Increase
Ford Motor Co. (F), the second-biggest U.S. carmaker, issued $1.25 billion of three-year notes, its biggest sale in six months, two weeks after Fitch Ratings raised the company’s credit ranking to investment grade.
The company sold 2.75 percent senior bonds to yield 238 basis points more than equivalent Treasuries, according to data compiled by Bloomberg. Proceeds will be used for general corporate purposes, according to a person familiar with the offering. The company last issued more than $100 million of dollar-denominated debt in January, when the Dearborn, Michigan- based automaker sold $1 billion of 4.25 percent notes maturing in 2017, according to data compiled by Bloomberg.
Fitch cited improved earnings, reduced pension costs and cash on hand as it raised Ford, which Moody’s Investors Service and Standard & Poor’s still rate as junk, to BBB- on April 24, the first time since 2005 that the biggest high-yield issuer has been ranked above speculative-grade by any of the three largest ratings firms.
Chief Executive Officer Alan Mulally has sought to restore Ford’s investment-grade rating to reduce borrowing costs and attempt to recover major assets put up for collateral as the company borrowed $23.4 billion in late 2006 to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. (GM) and Chrysler Group LLC.
Goldman Sachs Group Inc., HSBC Holdings Plc, Morgan Stanley and Royal Bank of Scotland Group Plc managed the sale, Bloomberg data show.
Ford, which in October sold $1.55 billion of 3.875 percent bonds maturing in 2015, trails General Motors among U.S.-based automakers in industry revenue.
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