Ford Motor Co. (F) has issued $1.25 billion note for three years after its rating was enhanced by Fitch Ratings in April 2012. Fitch Ratings Services boosted the issuer default rating of Ford and its Ford Motor Credit Company LLC (Ford Credit) unit to “BBB-” from “BB+.” The advancement was attributable to the company’s better financial performance along with improvement in balance sheet and product portfolio.
The 2.75% notes were issued at par, thus saving 1.125% from $1.55 billion of 3.875% bonds (due 2015), which was issued in October 2011. The company’s last issue was in January 2012 when it released $1 billion of 4.25% notes due 2017. The sale of these notes was organized by Goldman Sachs (GS), HSBC (HBC), Morgan Stanley (MS), and The Royal Bank of Scotland (RBS).
Ford recorded an improvement in its debt position in the last quarter. Its Automotive debt reduced by $2.9 billion to $13.7 billion as of March 31, 2012, from $16.6 billion as of March 31, 2011. The company’s Automotive operating-related cash flows declined significantly to $900 million from $2.2 billion in the first quarter of 2011.
Ford is one of the largest automobile producers worldwide and a supplier of auto financing through its Ford Motor Credit subsidiary.The company produces and distributes automobiles in 200 markets across six continents.
The company focuses on debt reduction strategy with appropriate product plans. However, economic weakness in Europe as well as higher structural and commodity costs have had a negative impact on its growth.
The company retains a Zacks #3 Rank on its stock, which translates to a short-term (1 to 3 months) Hold rating. We currently have a long-term (more than 6 months) Neutral recommendation on the stock.
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