Ford Motor Credit wants to further reduce its reliance on the asset-backed market, according to Sam Smith, director of long-term funding and securitization.
Smith, who was speaking at a conference sponsored by the American Financial Services Association, noted that Ford funded 46% of its managed receivables in the term asset-backed market in the first quarter, down from 48% for full-year 2012. Ford expects this figure to range from 42% and 47% for the full-year 2013.
“It will continue to decline over time,” he said.
Ford has been busy refinancing its outstanding bonds and bank loans since it was restored to investment grade by Moody’s Investors Service and Fitch Ratings in 2012; only Standard & Poor’s maintains a junk rating on the company, ‘BB+’.
Several times during his presentation, Smith reiterated Ford’s goal of maintaining a “strong investment-grade balance sheet.”
By strong investment grade, we mean “higher than it is today,” the executive said at one point. He declined to provide more specific guidance but said Ford wants to maintain this credit rating “throughout the economic cycle.”
The executive added, however that Ford is “very focused on what our competitors funding costs are.”
Asked whether Ford would be opportunistic about tapping the credit market, he replied that the auto lender is “managed with a really tight asset-liability match.
“From an interest-rate standpoint, we are very focused on spread, not absolute interest rates. You won’t see us bet on interest rates. In terms of how we respond to market conditions, our unsecured funding is a function … our unencumbered balance sheet, rather than opportunist financing.”