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Debt markets: Surviving the Wides of March

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Corporates borrowed their way through the crisis of 2020. What might happen next? Seven months after the first lockdowns began in Europe and the US, is coronavirus now priced into debt markets?

In March 2020, Ford Motor Company stopped making cars. Before the end of the month, the company was downgraded to junk by Moody’s and Standard & Poor’s. It forecast a net loss of $2 billion for the first quarter.

A tough time, one would think, to ask investors to stump up billions just to help it get through.

But it didn’t work out like that. The bankers that Ford had hired to sell a bond issue in mid April were finding something surprising. Not only were investors willing to buy, but they wanted more and more bonds. In the end, orders came in for $40 billion.

“They kept saying: ‘Give us a bigger deal,’” says one syndicate head in New York.

Ford sold $8 billion of bonds, having also drawn down more than $15 billion from its bank lines. As of April 24, according to its first-quarter results announcement, the company had cash of $35 billion.

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Mark Baker is Deputy Editor. Prior to joining Euromoney magazine he was based in Hong Kong as managing editor, Asia, for the Capital Markets Group. He previously edited EuroWeek magazine and was also deputy editor at International Financing Review.
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