Hi-Grade: Ford Motor Credit Shops Benchmark Bond Deal With CDS At New Low

Jun 3 2014, 9:46am CDT | by

After placing $1.75 billion of new debt in March, Ford Motor Credit (FMCC) is back in the market today with a benchmark offering of 3.5-year notes via bookrunners Credit Agricole, Deutsche Bank, Goldman Sachs, J.P. Morgan, and RBS, sources said.

The notes, which are guided to a BBB-/Baa3 profile, are not subject to redemption prior to maturity, according to regulatory filings.

Initial whispers for today’s deal started in the T+100 area. In March, the auto maker’s finance arm placed $1.1 billion of 2.375% five-year notes at T+93, which changed hands yesterday at tighter G-Spread-equivalent levels near T+80, trade data show. As part of that March offering, FMCC also inked $650 million of five-year floating-rate notes at L+83.

Today’s offering comes with FMCC credit spreads at post-crisis lows. Five-year CDS referencing FMCC debt ebbed 4% this morning, declining roughly three basis points, to the 70-bps area, or down from 118 bps at the start of the year and a 2013 peak near 180 bps witnessed late last June, according to Markit.

Today’s offering is the second of the year for the frequent issuer, and fourth since Ford Motor Co. and FMCC garnered their first across-the-board investment-grade ratings profile dating to 2005, following an S&P upgrade in early September. The issuer placed a total of $8 billion of new benchmark debt last year across six benchmark issues, up from $3.25 billion in 2012, LCD data show.

Ratings agencies maintain stable outlooks on the low-triple-B ratings. “Compared with most finance companies, we look positively on Ford Credit’s access to the debt markets, as most auto-related finance assets performed as we expected during the severe 2008-2009 downturn,” S&P analysts noted in ratings rationale published last month, while also citing FMCC as one of the biggest players in the asset-backed-securities marketplace. The company had about $21 billion of available liquidity at the end of last year, S&P said.

 
 

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