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America's Ford Motor Credit Co selling Sing-dollar bonds

Thursday, March 3, 2016 - 16:05

FOREIGN issuers are tapping the local debt market and the latest to do so is the United States' Ford Motor Credit Company with its three-year Singapore-dollar bond issue.

The initial price guidance for the US company's offering is in the 3.80 per cent area (+/- 10 basis points), according to the term sheet seen on Thursday.

Ford Motor Credit Company's issuance is the second deal from a foreign corporate this week, coming hot on the heels of Australia's Ausnet Services which sold S$200 million 5.5 per cent bonds on Monday.

The SGD market is broad and deep enough to attract foreign issuers, and an efficient swap market helps them swap the proceeds into other currencies, said Clifford Lee, DBS Bank head of fixed income.

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International issuers are attracted to the SGD market as it offers funding diversification, he said.

DBS Bank and Deutsche Bank are handling the issue.

Ford Motor Credit has tapped the SGD market previously but this is expected to be its biggest deal so far.

It had done two previously - S$150 million in 1999 and S$100 million in 2001 - and both have matured.

The latest bond transaction joins a list of high-quality credits to access the SGD market in the first two months of 2016 in a nod to risk-averse investors amid volatile financial markets.

"2016 SGD issuance has been dominated by investment-grade/higher quality issuers so far, and Ford Motor Credit Company is the latest to join the fray," said Terence Lin, assistant director, bonds and portfolio management, fixed income division, iFAST Corporation.

The firm currently sports ratings of Baa2, BBB- and BBB- from Moody's, S&P and Fitch respectively, representing investment-grade ratings, he said. Both S&P and Fitch have "positive" outlooks on Ford, which could see them join Moody's in upgrading Ford's credit ratings in the near term.

"Rated bonds are a rarity in the SGD-denominated bond space which should drive demand for the bonds, and we think that with the 3 year benchmark SGD swap offer rate still near some of the highest levels over the past 7 years, this also represents an opportune time for investors to lock in a 3-year SGD yield of around 3.8 per cent," he said.

Ford Motor Credit Company is a wholly owned subsidiary of Ford Motor Company, and is Ford Motor's financial services arm primarily dealing in auto loans. Ford Motor's roots go back to 1903 with the founding by American industrialist Henry Ford.

The firm is one of the largest car companies in the world, sporting a market capitalisation of US$52.5 billion as at March 2, 2016.

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