Ford Blows Out As Equity Sell Off Forces Credit Spreads Wider

  • 03 Mar 2003
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Five-year credit-default swap spreads on Ford Motor Credit jumped to 415 basis points Wednesday, after trading at 385bps the previous week, according to a New York-based trader. Large sell offs in the equity market beginning Feb. 21 forced a general widening of credit spreads, after experiencing a tightening trend the week before on the back of lowered volatility indices and a seemingly less imminent war in Iraq. Ford traditionally underperforms the overall credit-default swap market, being among the first names to widen when spreads move out, and the last to move in when they rally, he noted.

Ford continues to be plagued by a number of concerns on its business model, with doubts remaining on the auto giant's ability to sell more cars, the trader said. Liquidity issues, including the car maker's reliance on asset-backed securities as a funding source, are impacting the name, as is a continuing downward revision, by analysts, of future sales figures.

Scott Sprinzen, managing director in corporate and government ratings at Standard & Poor's in New York, said the ratings agency has Ford on negative watch with a rating of BBB. S&P does not place undue emphasis on the auto maker's reliance on ABS funding as Ford retains substantial high-quality assets on its balance sheet. The ABS transactions further reduce the amount of unsecured borrowing that would otherwise be required, he noted. S&P's rating on Ford is predicated on the firm continuing to show improving financial results as a result of restructuring measures.

Five-Year Credit Protection On Ford

  • 03 Mar 2003

All International Bonds

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1 Citi 244,235.70 910 8.87%
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3 Bank of America Merrill Lynch 211,276.97 750 7.68%
4 Barclays 166,062.82 634 6.03%
5 Goldman Sachs 162,877.27 537 5.92%

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1 HSBC 25,385.87 103 7.10%
2 Deutsche Bank 25,125.19 81 7.03%
3 Bank of America Merrill Lynch 22,023.57 59 6.16%
4 BNP Paribas 18,766.65 109 5.25%
5 Credit Agricole CIB 18,157.63 105 5.08%

Bookrunners of all EMEA ECM Issuance

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1 JPMorgan 12,578.87 55 8.17%
2 Citi 11,338.07 71 7.36%
3 UBS 10,682.06 44 6.93%
4 Goldman Sachs 10,419.53 53 6.76%
5 Morgan Stanley 10,194.88 57 6.62%