Ford’s New Debt: Attractive, But There Are Alternatives

 

By Michael Terry – Seeking Alpha

August 2, 2012

Ford Motor Credit Company (F) (“FMCC”) was in the debt market again today, issuing $750 million in 3.5 year debt. The following are the issue details:

Issuer Ford Motor Credit Company LLC
Size $750,000,000
Rating Baa3/BB+/BBB- (Stable/Stable/Stable)
Coupon 2.50%
Issue Px 99.68
Yield 2.598%
Maturity January 15, 2016
Spread +230bps/3yr Treasury
Interest Payment Dates Semi-annually on each January 15 and July 15
Call No par call prior to maturity

Term sheet, Prospectus

Covenants:

  • Limitation on Liens – Should FMCC pledge/lien any property in excess of $5MM (with certain exceptions), debt will be secured equally and ratably. For a financial entity, this does not mean much.
  • Merger and Consolidation – No consolidation or merger of Ford Credit, and no sale or conveyance of its property as an entirety, or substantially as an entirety, may be made to another corporation, if, as a result any asset of Ford Credit would become subject to a Mortgage, unless the debt securities shall be equally and ratably secured. Again, no merger if assets become subject to a merger – no real bite for a credit company.

Ford Motor Credit Outstanding:

Issue Size (MM) Px Yield
3.875% due 1/15/2015 $1,250 $104.04 2.17%
5.625% due 9/15/2015 $1,000 $109.00 2.60%
2.50% due 1/15/2016 $750 $99.68 2.60%
6.625% due 8/15/2017 $1,250 $114.00 3.56%
5.0% due 5/15/2018 $1,950 $106.83 3.67%

 

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