Ford debuts 'green bonds' amid shift to electric vehicles
Ford Motor Co. for the first time is selling bonds aimed at benefiting the environment, part of the automaker’s transition to electric vehicles.
The Dearborn-based company is marketing "green bonds" expected to mature in 10 years, according to a person with knowledge of the matter. Early pricing discussions anticipate a yield in the 3.625% area and net proceeds will be used exclusively for clean transportation projects and for the design, development and manufacturing of its battery electric-vehicle portfolio, the person said.
Ford said last week that it plans to cut its borrowing costs by more than half as it repurchases $5 billion in junk-rated debt and seeks to set a path to return to an investment-grade credit rating. At the time, the company said it expects to raise at least $1 billion in this new green bond offering, a move that’s part of a new sustainable financing strategy based on environmental and social goals.
“This lowers the cost of our debt substantially,” John Lawler, chief financial officer, said in an interview. “It provides us additional financial flexibility, not only from the standpoint of lower interest expense, but also it’s strengthening the balance sheet, which is good as we work to return to investment grade.”
— With assistance by Paula Seligson and Gowri Gurumurthy