Focus back to Swissies
In March, Ford Motor Credit suffered the indignity of becoming a fallen angel but in the primary debt markets its appeal to investors remains undiminished.
So much so that in November the auto company’s financing arm decided to return to the Swiss franc bond market after an absence of almost 20 years.
It was the first sub-investment-grade international corporate issue in the currency for five years, and the first US corporate issuer in more than three years.
Much has changed since Ford was last in the Swiss market in 2001 when it was rated A2/A/A+. On this transaction, it was rated Ba2/BB+/BB+, all with a negative outlook.
Leads began marketing a three-year senior unsecured bond at 2.125%/2.375%, with books opening for SFr200m at 2.125%/2.25%. A SFr230m (US$252m) note was priced at the tight end.
At the final yield, it came back of Ford’s US dollar curve but flat to its euro curve after adjusting for the cross-currency swap.
"Pricing had to fit relative to Ford's dollar and euro curves. That was the most challenging thing. It was like driving a Mustang behind a lorry and you want to pass by but can't because of the two-way traffic. This time, no two-way traffic, no lorry in front. The trade went like we started driving on a dirt track and ended up on a German Autobahn," said Stefan Boesl, director of Swiss bond syndicate at Commerzbank.
Swiss investors loved the deal given it offered a positive yield at the short end from a big, well-known name. More than 75 all-Swiss accounts took part with a very strong showing from private banks and retail, which together took more than 65% of the deal. Asset managers, many of whom are prevented from buying sub-investment-grade paper, took 16.5%.
Ford had been looking to return to the Swiss franc market for more than a year to diversify its investor base. The company held investor meetings in February, one of the last physical roadshows before Covid-19 lockdowns, then the pandemic and a spate of ratings downgrades in March and May kept issuance on hold until mid-November as it targeted the US dollar and euro markets instead.
It has natural Swiss franc funding needs from its FCE Bank subsidiary, Ford Credit (Switzerland).
Commerzbank, Credit Suisse and Deutsche Bank were active bookrunners on the deal.
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