Lending units of General Motors Co. and Ford Motor Co., the two largest U.S. automakers, are selling $3.5 billion of bonds.
General Motors Financial intends to issue $2 billion of senior notes in its first debt offering in almost nine months to help fund its purchase of Ally Financial Inc.’s international operations and to repay debt, the company said today in a regulatory filing.
Ford Motor Credit today sold $1 billion of 1.7 percent, three-year notes that yield 140 basis points more than similarly dated Treasuries and $500 million of floating-rate securities with the same maturity that pay 125 basis points more than the London interbank offered rate, according to data compiled by Bloomberg.
Libor, the rate at which banks say they can borrow in dollars from each other, was set at 0.275 percent today.
The GM debt will probably be issued in three-, five- and 10-year portions and may be sold May 8, according to a person familiar with that offering who asked not to be identified because terms aren’t set. Proceeds will be used to finance a portion of its $4.2 billion deal for Ally’s operations in Europe and Latin America, to repay an inter-company loan and to fund working capital.
Ally, formerly known as GMAC Inc., was owned by GM until 2006, when the automaker sold 51 percent to Cerberus Capital Management LP. GMAC almost collapsed under the weight of bad subprime mortgages during the financial crisis.
GM last issued new bonds in August with a $1 billion sale of 4.75 percent securities due 2017, Bloomberg data show.
The GM finance unit’s $500 million of 6.75 percent debt due June 2018 traded May 2 at 114.5 cents on the dollar to yield 3.59 percent, or 294.7 basis points more than Treasuries, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Those bonds are rated Ba3 by Moody’s Investors Service and an equivalent BB- at Standard & Poor’s.
Ford’s offering may be used for the purchase of receivables, for loans and for retiring debt, the unit said today in a filing. The company is rated Baa3 by Moody’s, the lowest level of investment grade, and BB+ by S&P, the highest category of speculative grade.