Ford Motors priced the largest green bond ever by a US corporation raising $2.5b via a 10Y issuance. The bonds were priced at a yield of 3.25%, 37.5bp inside initial guidance of 3.625% area. Net proceeds will be used exclusively for clean transportation projects and for the design, development and manufacturing of its battery electric-vehicle portfolio. In the prior week, the automaker said that it planned to repurchase up to $5bn of its high coupon bonds and issue $1bn green bonds. Ford’s CFO John Lawler said, “This lowers the cost of our debt substantially…It provides us additional financial flexibility, not only from the standpoint of lower interest expense, but also it’s strengthening the balance sheet, which is good as we work to return to investment grade”. Ford last week announced a “sustainable financing framework” to provide access to new sources of capital, including investors supporting its ESG initiatives.

Ford’s new green 3.25% 2032s are up 0.13% since it was priced to 100.125. The bonds are priced 27bp wider to its 7.45% 2031s that yield 2.98% in secondary markets.

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