Ford's Joe Hinrichs says the automaker is taking advantage of favorable market conditions to raise $2 billion in new debt.
(This story has been updated with new information.)
Ford Motor Co. is looking to take advantage of favorable market conditions by raising $2.8 billion in new debt. It marks the first time in four years the automaker has issued new debt.
Joe Hinrichs, Ford president of the Americas, told Reuters the funds would be used for investment in new technology including electric vehicles, self-driving vehicles, as well as mobility efforts such as ride-sharing and ride-hailing.
“It’s an opportunistic time,” Hinrichs told Reuters in an interview. “It’s a supportive marketplace for long-term debt given where rates are, and we want to make sure that throughout the cycle of the industry we have the flexibility to do what we need to do and want to do, especially in the emerging part of the business.”
The debt will be issued in two parts, according to a filing with the Securities and Exchange commission. The first is a $1.5 billion bond with an interest rate of 4.346% that matures in September 2026. The second offer is a $1.3 billion note with a 5.291% interest rate maturing in June 2046.
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“Ford is taking advantage of favorable market conditions to issue long-term debt to raise capital for general corporate purposes,” said Brad Carroll, Ford spokesman, in an email to TheDetroitBureau.com. “Consistent with our recent Investor Day presentations, we continue to increase our investments in emerging opportunities, primarily in the areas of electrification, autonomy and mobility.”
Ford is looking for big sales results out of the soon-to-debut new Lincoln Navigator. The old version, above, hasn't seen a substantive redesign in 14 years.
Ford has been playing catch up in the electrification, autonomous vehicle and mobility arenas with General Motors Co. However, it is looking to close the gap quickly. It’s made several acquisitions in the last year aimed at improving its footing in all three arenas.
(Click Here for details about November’s sales results.)
In addition to the new debt, Hinrichs told Reuters that the automaker expects to take a bite out of the sales lead that GM has in its large sport-utility vehicles with its newly redesigned Ford Expedition and Lincoln Navigator models.
The Navigator was slated to be discontinued at one point, but the growth of luxury SUVs in the U.S. market was too much for the automaker to ignore. Not only has the Cadillac Escalade’s sales taken off since its recent redesign, Fiat Chrysler plans to bring back the Jeep Grand Wagoneer to compete with top luxury models like Land Rover, BMW, Cadillac and others.
(To see more about Ford’s plans for its new Fiesta, Click Here.)
Hinrichs declined to tell Reuters about internal sales expectations for the new utes, but did offer “it is a big opportunity for us.” GM’s four large SUV offerings have outsold Ford’s this year, but Ford’s sales for them are up 33% while GM’s are up 18%.