Ford Motor Offers $2.5 Billion Green Bond to Investors

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The move comes days after the auto maker said it would buy back high-value debt

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Ford is following the example set by several other US companies that have increased green bond sales this year. According to data provider, Refinitiv, corporate green bonds marketed in the U.S. have generated $58.6 billion in 90 offerings so far this year, more than double what it was a year ago, when green-bonds in the U.S. The total of the issuance was $28.7 billion. During the same period in 2019, green-bond issuances totaled $22.4 billion.

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Ford’s bonds set a record for US corporate green bonds, Refinitiv said, followed by $2.0 billion green bonds by Walmart Inc.,

which was released in September.

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Ford said Thursday that its sustainable-financing framework will serve as the basis for issuing both safe and unsecured financing tools, including bonds tied to the company’s environmental, social and governance goals, such as clean transportation and clean manufacturing. . The auto maker said it does not want to become carbon neutral after 2050.

Chief Financial Officer John Lawler said last week, “We’re putting our money where our mouth is … and directing capital to what’s good for the planet.” Proceeds from green-bond sales can be linked to the company’s plans. Spend $30 billion on electric vehicles by 2025. Ford declined to make Mr Lawler available for an interview on Monday.

The company said last week that it would repurchase up to $5 billion in high-priced debt to reduce its interest costs, including securities with a 9% coupon in April 2025 and a 9.625% coupon in April 2030. The company sold $8 billion worth of bonds in April 2020 as a financial cushion as the coronavirus pandemic forced Ford’s factories to temporarily close and curtail sales.

Ford also eliminated its dividend at that time. It said last month it would reinstate its fourth-quarter dividend, pledging to distribute 10 cents per share by December 1.

“There is a lot of interest in green bonds, especially on the investor side,” said Evan Philipp Fenseth, a senior partner at Tigress Financial Partners LLC, an investment bank. “Many companies are tapping into a market where there is a lot of demand.”

Ford’s green bond this year fits with debt financing tied to environmental goals and the company’s push for zero-emissions vehicles, said David Whiston, an equity analyst in Morningstar Inc.’s research division.

Ford’s senior unsecured loan is rated Ba2 by Moody’s,

Which is two degrees below investment-grade status. S&P Global Ratings and Fitch Ratings each said they have assigned a BB+ rating to the green bond, a notch below investment-grade status.

Nina Trentmann at Nina [email protected]

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