FMCC Dollar/Euro Offering Over $8.2 Billion

Just when you thought the days of blockbuster bond issues were over…
Ed ZwirnJanuary 25, 2001

Ford Motor Credit Co. hit the investment-grade bond market like gangbusters this morning with a bond offering under its “GlobLS” program worth more than $8.2 billion.

The figure includes five-year and 10-year dollar-denominated bonds, which have already priced, as well as a 3.5 billion euro ($3.24 billion) three-year note for which no price details were available.

The offering, which one trader said “was in good shape” but apparently not greatly oversubscribed, wound up some 65 percent larger in size than originally forecast when news of it came out last week.

This makes it the largest bond deal from a U.S. company so far this year and puts it clearly above DaimlerChrysler’s $7.1 billion similarly structured offering priced Jan. 11.

But sources close to both deals indicated that the latest issue’s larger size was brought about more by Ford’s willingness to borrow as much as it could than by a difference in investor demand.

“It’s not that Ford is seeing that much more demand than DaimlerChrysler, it’s just that they’re that much more willing to upsize the deal,” said a trading source prior to today’s pricing.

DaimlerChrysler, on the other hand, was said by underwriters to be as much as four times oversubscribed.

But, regardless of the depth of demand, the FMCC offering clearly benefited from a general upswing in the corporate bond market.

The $3 billion 6.875 percent five-year tranche priced at 99.825 percent of face value to yield 6.917 percent, or 200 basis points over the 5.75 percent Treasury due November 2005.

The $3 billion 7.375 percent 10-year tranche priced at 99.644 to yield 7.426 percent, for a spread of 215 basis points over.

Both spreads were lower than the levels forecast at yesterday’s launch.

The day before pricing, the five-year notes had been marketed at 203 basis points over the five-year Treasury, while the day before pricing, the spread on the 10-year notes was 218 basis points over.

See related stories:

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Full Speed Ahead For Auto Bonds

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