Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Took a little longer than I expected, but 2 billion at 5% is a nice way to start the new year:

Let's say they are getting rid of bonds paying 7.5% for the 5%. 2.5% savings on $2 billion. $50 million before refi costs.

Last year they had 12 billion in debt. Probably more to come? Time will tell.

MjH

--snip--

"Ford is taking advantage of what it considers to be very favorable market conditions to issue low-cost, long-term debt to improve its balance sheet," the company says in the bond prospectus.

Proceeds are for buying back costlier debts and to make voluntary payments to its pension plan.

Fitch Ratings said Thursday that Ford is "essentially offsetting any debt increase with a reduction in its substantial pension liabilities," so the new debt "has no effect on the company's current ratings or outlook."

The bonds are expected to pay investors 1.90 percentage point over comparable Treasurys, or roughly 4.97%. When Ford sold similar debt 12 years ago, it paid a fixed-rate of 7.45%.
Print the post Back To Top
No. of Recommendations: 0
Proceeds are for buying back costlier debts and to make voluntary payments to its pension plan.

I wonder if that statement has something to do with the $0.50 drop in F-A shares, even as common rallies.

They have higher coupon issues than F-A, so it could be ignored, even if Ford were to call some debt. I've been expecting more calls for a while now, but few have materialized. A substantial portion of Ford's automotive debt is uncallable, but there are some notably high coupon exceptions that would be worth taking out. I guess the combo of high pension obligations and capex needs in EasternEurope and Asia put them on hold.

This line may be a signal that they're thinking about taking more out. It would be wise to refi it while rates are low. I hope they do more.

Peter
Print the post Back To Top
Advertisement