In Nov. 4 article, correction of ninth paragraph that says customers would need to buy hybrid or electric vehicles

Paul Lienert

Ford Motor (NYSE) Co announced that it will retire as much as $5 billion of high-interest debt, and use the rapidly-growing “green” bond market to finance electric cars and extend credit to those with poorer 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 stated that the company will tender cash for covid bonds at interest rates of 8% to 9.5%. These were issued by the company in April 2020 at the beginning of the 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-powered 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, a top seller in full-size pickup trucks or SUVs is still a popular choice for U.S. buyers.

Ford will have access to capital from new investors, as well as those who support environmental, governance, and governance (ESG), through a “sustainable financing framework”, which was announced on Thursday.

Ford Credit would be able to finance customers with low credit scores through new green bonds. However, they would need to purchase hybrid or electric vehicles.

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.

The ninth paragraph in this Nov. 4 article is corrected to clarify that customers would need to purchase hybrid or electric vehicles.