On Monday, Ford Motor Co. proposed a $2.5 billion unsecured green bond to investors, a first for the company that arrives days after it began its sustainable-financing structure and said it would purchase back higher-priced debt.
Dearborn, Mich.-based Ford stated it would designate the profits from the bond offering, which has a 3.25% coupon and arrives in 2032, to support investment in its developing battery electric vehicle collection, including the Mach-E, F-150 Lightning and E-Transit models. The company sold the bond to existing and fresh investors.
Ford is succeeding the standard set by several different U.S. companies that have stepped up sales of green bonds this year. The corporate green bonds market in the U.S. had collected $58.6 billion in profits in 90 donations this year, more than double the total from a year ago when green-bond issuance totalled $28.7 billion in the U.S., according to Refinitiv, a data provider. During the same period in 2019, green-bond issuance totalled $22.4 billion.
Ford’s bond sets a record for U.S. corporate green bonds, Refinitiv said, followed by a $2.0 billion green bond by Walmart Inc., issued in September.
On Thursday, Ford said its sustainable-financing framework would serve as the foundation for issuances of both acquired and unsecured investment tools, including bonds attached to the company’s environmental, social and governance goals, like clean transportation and clean manufacturing. The auto manufacturer said it needs to be carbon neutral no later than 2050.
“We’re putting our money where our mouth is…and directing capital to what’s good for the planet,” Chief Financial Officer John Lawler said last week, adding that the proceeds from a green-bond sale could be tied to the company’s plans to spend $30 billion on electric vehicles by 2025. Ford declined to make Mr Lawler available for an interview on Monday.
Ford also scrapped its share at the time. It said last month it would restore its dividend in the fourth quarter, promising to allocate 10 cents a share as of Dec. 1. “There is a lot of interest in green bonds, especially on the investor side,” said Ivan Philip Feinseth, 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 meets with the company’s importance this year on debt financing attached to environmental objects and its shift to zero-emission vehicles, said David Whiston, an equity analyst at Morningstar Inc.’s research division. Ford’s senior unsecured debt is rated Ba2 by Moody’s, two notches below investment-grade status. S&P Global Ratings and Fitch Ratings said they had assigned the green bond a BB+ rating, one notch below investment-grade rated.