Investor Alert

Aug. 17, 2022, 12:27 p.m. EDT

Ford’s green bond sees $5 billion in demand as Biden signs climate bill

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Ford Motor Co. (F)
  • X
    S&P 500 Index (SPX)
  • X
    Dow Jones Industrial Average (DJIA)

or Cancel Already have a watchlist? Log In

By Joy Wiltermuth

Investors swarmed over Ford Motor Co.’s new $1.75 billion green-bond deal on Tuesday to help boost its development of more electric vehicles.

Order books for Ford’s /zigman2/quotes/208911460/composite F +3.12% speculative-grade debt deal reached more than $5 billion, according to a portfolio manager and Informa Global Markets, which helped the auto giant achieve cheaper funding than initially expected.

The bond deal came the same day President Joe Biden signed the Inflation Reduction Act into law , a smaller version of the earlier Build Back Better proposal, which includes an up to $7,500 credit for qualifying electric vehicles if the assembly is finalized in North America.

Ford said in a public filing Tuesday that proceeds from the bond financing will aim to fund clean-transportation projects, including the design, development and manufacturing of electric vehicles in North America. This includes next-generation electric F-150 pickups, future Lincoln vehicles and other vehicles that have yet to be announced.

Ford declined a request for comment.

Its single 10-year class of green bonds, rated Ba2 by Moody’s Investors Service and BB+ by S&P Global, fetched 6.1%, according to Informa. Initial talk was in the 6.375% range, CreditSights said.

That compares with the yield on the ICE BofA US High Yield Index narrowing to about 7.2% this week from a peak of 8.8% in July, after the junk-bond market staged a record rally in recent weeks.

EV tax credit

In conjunction with the act’s signing, the U.S. Treasury Department on Tuesday released a two-page fact sheet and related guidance on how the law can make electric vehicles more affordable for households, including for model 2022 and 2023 EVs.

Read : Here’s how the Inflation Reduction Act’s rebates and tax credits for heat pumps and solar can lower your energy bill

Like a wave of other companies in the early part of the COVID crisis, Ford lost its coveted investment-grade credit rating in 2020 after it was downgraded to speculative, or “junk,” status.

In late July, Ford reported second-quarter earnings that blew past Wall Street expectations, despite continued supply-chain issues and concerns about the U.S. economy. Total revenue rose 50% to $40.2 billion, from $26.8 billion a year ago, including a 57% increase in automotive revenue. The “popularity” of Ford’s lineup drove the “solid” results, the company said.

In recent years, investors have been pouring funds into strategies that aim to produce better environmental, social and governance outcomes. Global green-bond issuance has remained robust in 2022, totaling $136 billion in the second quarter, according to Moody’s ESG Solutions.

Green bonds were expected to account for about half of Moody’s $1 trillion forecast for sustainable bond issuance this year, a category that includes green, social, sustainability and sustainability-linked bonds.

Shares of Ford were up 0.7% Tuesday, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.59% and Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.82% finished 0.2% and 0.7% higher, respectively, to extend a powerful summer rally.

Read : Tesla /zigman2/quotes/203558040/lastsale TSLA -0.52% and Ford attract new investments from George Soros’s fund

$ 10.58
+0.32 +3.12%
Volume: 61.62M
Dec. 1, 2023 4:00p
P/E Ratio
Dividend Yield
Market Cap
$41.07 billion
Rev. per Employee
+26.83 +0.59%
Volume: 0.00
Dec. 1, 2023 4:51p
US : Dow Jones Global
+294.61 +0.82%
Volume: 0.00
Dec. 1, 2023 4:51p
US : U.S.: Nasdaq
$ 238.83
-1.25 -0.52%
Volume: 121.33M
Dec. 1, 2023 4:00p
P/E Ratio
Dividend Yield
Market Cap
$763.20 billion
Rev. per Employee

Get news alerts on Ford Motor Co. — or create your own.
This Story has 0 Comments
Be the first to comment
More News In

Story Conversation

Commenting FAQs »

Partner Center

World News from MarketWatch

Link to MarketWatch's Slice.