DBRS Assigns BBB Rating to Ford Motor Company New Issue

DBRS Limited (DBRS) has today assigned a rating of BBB with a Stable trend to the Senior Unsecured Notes (the Notes) issued by Ford Motor Company (Ford or the Company). The Notes are issued in two series: USD 1.5 billion due December 8, 2026, featuring a coupon of 4.346%, and USD 1.3 billion due December 8, 2046, featuring a coupon of 5.291%. Proceeds of the Notes will be used for general corporate purposes.

On February 17, 2016, DBRS upgraded the Issuer Rating of Ford to BBB (for further details, please see the related press release). The upgrade reflected the improved profitability of Ford’s collective international operations (including equity income from its Chinese JVs) amid ongoing solid earnings in its core North American market. DBRS anticipates that Ford’s international earnings will continue to trend positively amid a combination of moderate industry growth (primarily in Europe), improved product cadence and ongoing efficiency gains.

The above notwithstanding, North America continues to represent the main source of profitability for Ford. While growth in this region is likely to moderate going forward, aggregate volumes are expected to remain at solid levels. DBRS notes that even in the event of a contraction in industry volumes, Ford is likely to remain materially profitable given its strong market position and favourable cost structure in this region. Moreover, the Company is benefiting from a firmer product mix as a result of the ongoing industry migration toward light trucks (which generally have considerably higher margins than those of compact vehicles).

DBRS notes that Ford’s newly issued debt is readily absorbed by its solid financial profile, with credit metrics remaining above levels commensurate with the assigned ratings on a pro forma basis. Moreover, the Company’s cash and liquidity position remain robust, with Ford’s automotive operations having a net cash position of $11.2 billion and available liquidity of $35.2 billion as of September 30, 2016.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Automotive Industry, which can be found on our website under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.