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Ford to sell $1.08 billion of loan bonds

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Ford to sell $1.08 billion of loan bonds

They could be sold starting this week

BY SARAH MULHOLLAND

BLOOMBERG NEWS

Ford plans to sell $1.08 billion of bonds tied to auto loans after the U.S. Securities and Exchange Commission created a six-month window for companies to offer asset-backed debt without including ratings in marketing documents.

The bonds may be sold as soon as this week, according to a person familiar with the offering who declined to be identified because terms aren't public. The automaker last sold similar debt in April, according to data compiled by Bloomberg News.

Ford is the first issuer to sell asset-backed bonds since President Barack Obama signed an overhaul of regulation on Wednesday. The Wall Street legislation makes ratings companies vulnerable to lawsuits when underwriters include their assessments in documents used to sell debt.

Moody's Investors Service, Standard & Poor's and Fitch Ratings, in an effort to avoid the legal liability, told borrowers not to include debt ratings in marketing materials, leading some issuers to postpone public bond sales last week.

The law subjects ratings companies to so-called expert liability, meaning they would face the same legal risks as accountants and other parties that participate in bond sales.

The SEC said Friday in a statement that companies could omit ratings from regulatory documents for six months to give market participants a transition period to comply with new laws.

Ford's sale is the first public asset-backed securities issue to be offered since Toyota's finance arm sold $1.75 billion in bonds on July 14, Bloomberg data show.

The U.S. automaker postponed the sale last week because of the new law, Dow Jones Newswires reported last week.

"Ford Motor Credit Company worked with the SEC to find an approach that temporarily resolved this industry issue," Margaret Mellott, a Ford spokeswoman, said in an e-mailed statement.

The financial overhaul was spurred by the 2008 financial crisis that triggered the collapse of Lehman Brothers Holdings.

Obama vowed the law will bring an end to taxpayer bailouts of financial firms and said adjustments to the regulations may have to be made along the way.

link:

http://www.freep.com/article/20100727/BUSINESS01/7270327/1331/Ford-to-sell-1.08-billion-of-loan-bonds

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