Ford Motor Aims to Raise New Long-Term Debt -- 2nd Update

By Christina Rogers 

Ford Motor Co. rose $2.8 billion in new long-term financing for its automotive business Monday, tapping debt markets for the first time in nearly four years to fund investment in new technologies.

The No. 2 U.S. auto maker disclosed the debt issuance in a regulatory filing Monday and said it would take advantage of favorable market conditions to raise money for "general corporate purposes."

The move comes after several years of banking big profits on increasing sales of trucks and sport utilities. The company has signaled it expects increased pressure as the U.S. light-vehicle market plateaus, regulatory costs increase and the race to make cars more autonomous heats up.

Once awash in debt, Ford paid down its obligations in the years following the financial crisis to revitalize its balance sheet. General Motors Co. and Chrysler, now part of Fiat Chrysler Automobiles NV, filed for bankruptcy in 2009 to erase billions of dollars in debt.

All three companies have taken on new debt in recent years even as profits soar. GM earlier this year issued $2 billion in new debt to shore up its pension plan for U.S. hourly workers.

The last time Ford issued new automotive debt was in January 2013, when it raised $2 billion in 30-year notes at 4.75%. Ford had $24.3 billion in automotive cash and $13.1 billion in debt at the end of the third quarter 2016.

"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," the company said in a statement.

Ford is moving to diversify its operations beyond its core business of building and selling cars, moving into new areas, such as ride-hailing and car-sharing, in a bid to catch up with deeper-pocketed Silicon Valley rivals trying to change the way consumers think about getting around.

In recent months, the car company has announced a series of new ventures aimed at broadening its mission, including purchasing a van-shuttle service in San Francisco and taking a stake in laser-sensor maker Velodyne Inc. which supplies components for autonomous cars.

Ford's Chief Executive Mark Fields said in an interview Friday the company plans to continue this strategy of betting small sums on startups and tech firms that can help it bolster expertise in emerging areas.

"We're always looking for appropriate partners but it comes down to what capabilities do we need," Mr. Fields said.

The company has also committed to spending $4.5 billion in the next three years to expand its lineup in electrified-vehicles and plans to release a fully autonomous car with no brake pedals or a steering wheel in 2021.

The Dearborn, Mich., auto maker's capital spending is expected to rise to 5.6% of revenue in the next two years from 4.9% in 2016, as Ford steps up investment and acquisitions related to new businesses.

Write to Christina Rogers at [e-mail]

(END) Dow Jones Newswires

December 05, 2016 18:09 ET (23:09 GMT)

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