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Ford to retire $5 billion in high-interest debt, issue green bonds -Breaking


© Reuters. FILEPHOTO: A Ford F-150 Lightning pre-production electric truck is seen in Dearborn (Michigan), U.S.A, September 16, 2021. REUTERS/Rebecca Cook/File Photo/File Photo

Paul Lienert

Ford Motor Co (NYSE:) Co stated that it intends to eliminate up to $5 Billion in high-interest loans and to tap into the growing market for green bonds. This will allow it to finance electric vehicles as well as expand credit to customers who have lower credit scores.

The automaker hopes to eventually regain its investment-grade rating and Ford Credit’s captive financing arm. This would reduce future borrowing costs.

Treasurer Dave Webb told media that the company would tender money for “covid bond” (at 8%-9%5% interest) it issued in April 2020 as part of the worldwide pandemic.

Ford anticipates offering a $1B green bond with 3.5%-4% interest at first to replace high-coupon debt and supplement its zero-interest convertible debt earlier in the year.

The automaker will use part of the funds to fund its ambitious plans to transform a large portion of its worldwide production from fossil fuel-fueled combustion engines to electric cars.

According to the company, it intends to invest at least $30 Billion in 2025 to develop, engineer, and produce a wide range of EVs across North America, China, and Europe.

Ford remains a major seller of SUVs and full-size pickup trucks. These vehicles are highly profitable, which is why they continue to be popular among U.S. consumers.

Ford’s “sustainable finance framework” was unveiled Thursday. It will allow Ford to access new capital sources, such as investors who are supportive of environmental, social, and governance initiatives (ESG).

Ford Credit could use new green bonds to provide financing for customers with poor credit ratings, without requiring them to own hybrid or electric cars.

The announcement of Thursday coincides with the United Nations Climate Change Conference in Glasgow (Scotland) and the fifth anniversary celebrations for the Paris Climate Agreement.

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