Ford Motor Co.’s stock experienced a 3% rise on Wednesday following an optimistic earnings report. This positive news also led to increased buying of its outstanding bonds and resulted in tighter spreads over U.S. Treasuries.
Impressive Fourth-Quarter Revenue and Exciting Developments
Ford’s fourth-quarter revenue surpassed consensus estimates. Additionally, the company made significant announcements, including the introduction of a next-generation, smaller electric vehicle that will compete with Tesla Inc.’s upcoming “Model 2.” Furthermore, Ford revealed its plans for $2 billion in cost cuts this year and unveiled a special dividend.
CEO Optimistic About Future Growth and Profitability
Chief Executive Jim Farley expressed his satisfaction with the solid performance of 2023. However, he emphasized that Ford is far from finished and is positioned for substantial growth and profitability in terms of revenues.
Strong Performance of Ford’s Bonds
Data from BondCliQ Media Services illustrates that Ford’s most active bonds experienced net buying early on Wednesday. These bonds have consistently performed well, with spreads tightening by 16 to 39 basis points year-to-date. In a single day, spreads tightened by an additional five to 10 basis points.
Over the past 10 days leading up to the earnings report, Ford’s bonds have witnessed net buying.
Ford’s Debt Overview
As of November, Ford’s outstanding debt stands at approximately $143 billion. The unsecured portion, which includes Ford plus Ford Motor Credit, amounts to $92 billion. These debts have maturities that extend to 2097.
Last November, Ford returned to the investment-grade market and withdrew about $67 billion from the high-yield market in just one day. This decision followed credit upgrades from S&P Global Ratings and Fitch.
