NEW YORK -- Ford Motor Co.'s finance arm on Tuesday said it has raised its planned debt issuance for 2005 in response to recent demand.
Ford Motor Credit Co. plans to issue $20 billion to $25 billion of debt, up from previous forecasts of $16 billion to $22 billion, said Ann Marie Petach, Ford's vice president and treasurer, speaking on a conference call for fixed-income investors.
"This change reflects higher unsecured issuance as result of recent market demand," Petach said. Through July 15, Ford had completed about $18 billion of public term debt sales, she said.
For the year, Ford expects to issue $7 billion to $8 billion of unsecured debt to institutional investors, up from previous forecasts of $3 billion to $4 billion. It also plans to sell $12 billion to $15 billion of secured debt, down from earlier forecasts of $12 billion to $16 billion.
Unsecured issuance for retail or individual investors is unchanged at $1 billion to $2 billion.
Earlier on Tuesday, Ford reported a 19 percent drop in second-quarter profits, hurt by a steep loss in its North American automotive operations. Ford also warned that it expects no profit from its global automotive operations this year and said it would give no more quarterly earnings forecasts.
Ford Credit had originally planned to sell up to $30 billion of debt this year, but cut back its planned borrowings in April after yield spreads on its bonds widened, raising borrowing costs.
Spreads on Ford's long-dated bonds surged to nearly 570 basis points more than Treasuries in May after Standard & Poor's cut its ratings to junk status. Spreads narrowed in the following weeks after Fitch Ratings downgraded Ford's ratings but kept them investment-grade.
Moody's Investors Service rates Ford one notch above junk and Ford Credit one notch higher. It has both on review for downgrade.
Petach also said that Ford bought back less than $100 million of debt in the second quarter and may buy back more, depending on spread levels and cash availability.
Ford Credit had $19 billion of cash at the end of June and plans to end the year with $13 billion to $15 billion, versus about $13 billion at year-end 2004, Petach said.
"This level of cash provides us flexibility in the execution of our funding plan this year and next," she said.