Ford Issues $2 Billion of Bonds With 30-Year Maturity
Ford Motor Co. (F), the second-largest U.S. automaker, issued $2 billion of bonds in its first sale of fixed-rate debt maturing in at least 30 years since 1999.
The 4.75 percent securities due January 2043 were priced to yield 180 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. Proceeds from the sale will be used to refinance debt and to fund its pension plan. The notes may be rated Baa3, the lowest level of investment grade, by Moody’s Investors Service.
The offering from Ford, which was lifted last year to high grade at Moody’s and Fitch Ratings, comes as auto sales surge and with borrowing costs touching record lows. Ford’s U.S. light-vehicle sales rose 1.6 percent in December, the company said today, exceeding the 1.2 percent increase forecast by analysts surveyed by Bloomberg.
Ford’s $1.8 billion of 7.45 percent bonds due July 2031 traded at 128.5 cents on the dollar to yield 5.06 percent yesterday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The automaker issued $4.95 billion of 4.25 percent, 30-year convertible securities in December 2006, Bloomberg data show.
Ford was raised to investment grade by Moody’s in May and by Fitch in April. Standard & Poor’s rates the company’s debt BB+, or the highest level of speculative grade, with a positive outlook, according to data compiled by Bloomberg.
Borrowing costs for high-grade American companies have declined to 2.8 percent from last year’s high of 3.93 percent, according to the Bank of America Merrill Lynch U.S. Corporate index data.
Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley managed the Dearborn, Michigan-based company’s sale, Bloomberg data show. General Motors Co. (GM) is the top-selling automaker in the U.S.
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