NEW YORK -- Ford Motor Co.'s finance arm on Wednesday trimmed its borrowing plans for 2005 and said it will not likely issue more unsecured debt this year after its ratings were cut to junk status on May 5.
Total borrowings at Ford Motor Credit Co. will likely be about $16 billion to $22 billion this year, down from earlier forecasts of $16 billion to $25 billion, according to Ford Credit's chief financial officer David Cosper.
"We could be out of markets, frankly, if we had to be, with our cash balance through year end," said Cosper, speaking at a conference for fixed-income investors in Boston. "I don't foresee that happening, but in the near term, we are going to be reliant on secured borrowings."
In response to a question, Cosper said Ford could meet all its funding needs in the asset-backed, or secured, market for at least the next two years if it had to.
Standard & Poor's cut had little effect on Ford's asset-backed issues, which are secured by assets and carry higher ratings.
Ford's borrowing costs in the unsecured debt market have surged since Standard & Poor's cut its ratings earlier this month, citing concerns about the automaker's sliding market share and rising employee health care costs.
Total yields on Ford Motor Credit's notes with a 7 percent coupon due in 2013 have risen to 9.31 percent from 8.04 percent before the downgrade, according to MarketAxess.
That extra 1.27 percentage points of yield means Ford Credit would pay an additional $12.7 million annually for every $1 billion it borrowed.
Ford Credit is the issuer for most of Ford's debt, which totaled about $161 billion as of March 31.
Ford Credit now plans to issue about $12 billion to $16 billion in asset-backed debt, up from earlier forecasts of $10 billion to $15 billion, according to Cosper.
The company has issued about $4 billion of unsecured debt this year, including U.S. retail notes and some issuance in the institutional market in the United States and Japan, Cosper said.
"I would not want to live without unsecured term debt forever," said Cosper. In a worst-case scenario, however, "we do know how to reduce the size of our balance sheet in an orderly fashion," he said.
Ford Credit has also shut down its retail notes program for now, Cosper added.
"Spreads have been very volatile. We tend to price weekly and didn't feel it was appropriate to be in that market at the moment, for us or investors," he said.