Ford Latest Rising Angel to Sell Investment-Grade Debt

http://blogs.wsj.com/deals/2012/06/08/ford-latest-rising-angel-to-sell-investment-grade-debt/

Ford Motor Co. wasted little time tapping the investment-grade bond market after getting its Blue Oval back.

Bloomberg News
Blue Ovals all around

The auto-maker had celebrated its return to the investment-grade universe last month, an upgrade that allowed it to reclaim its Blue Oval back. And now it has managed to raise funding outside of junk for the first time in seven years.

From colleague Patrick McGee:

Ford sold $1.5 billion of five-year bonds–its largest deal since April 2010, according to data provider Dealogic–at a yield of 3.008%, or 2.3 percentage points more than the five-year Treasury rate. When it sold five-year bonds in February, it had to pay 4.25%, or 3.54 points more than Treasurys.

The much lower financing cost reflects the savings Ford can attain now that high-grade investment accounts can own its bonds. Moody’s Investors Service upgraded Ford and Ford Motor Credit Corp., which issued the bonds, to investment-grade two weeks ago, following a similar move by Fitch Ratings.

Ford is just the latest U.S. corporate titans to head to market shortly after having its rating upgraded.

Tyson Foods earlier this week launched a $1 billion debt sale for 10-year notes at a 4.5% yield. It will use those funds to pay off debt coming due in 2014 that was paying a hefty 10.5% coupon. That savings came after Fitch upgraded Tyson earlier this year and Moody’s gave it a positive outlook.

J.P. Morgan was among the lead underwriters on both debt deals. Bank of America-Merrill Lynch and RBC were also among the leads on both deals.

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