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Big Ford Bond Deal? No, Just Another Phantom Menace

The much-discussed $3 billion offering was never on the slate, the automaker insists.

There were no plans for a bond offering. The entire market is crazy.

That's what

Ford

(F) - Get Ford Motor Company Report

would like people to believe, anyway.

In a most

Keyser Soze

-esque fashion, an official at the company asserted today that Ford's planned sale of $3 billion in global securities never existed, that the whole thing was just a figment of the market's collective imagination.

"There never was a bond offering," said Kristen Kinley, assistant manager of public affairs at

Ford Motor Credit

. "There were rumors that we were going to bring one, but there never was a deal."

Never mind that various corporate calendars listing upcoming deals had this listed at the top: Ford Motor Credit, $3 billion to $4 billion in notes, underwritten by

Bear Stearns

,

Merrill Lynch

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and

Salomon Smith Barney

. Never mind that the source of the Treasury market's agony during the last few days has been the thought of absorbing this new supply, at the end of the quarter, when nobody wants to take on any risk. Never mind that the company's treasurer said he hoped for a deal just after the roadshow to introduce the product. Never mind investors interviewed over the last three days received calls from broker/dealers looking to appraise interest in the deal.

"Around last Thursday broker/dealers started contacting us indicating that there was going to be $3 billion to $4 billion in the five-year

maturity area," said one investor at an insurance company.

This followed Ford's June roadshow, a series of presentations designed to introduce Ford's new global bond product. The bonds, called Global Landmark Securities, are designed to enhance liquidity, or tradability, in the credit markets, something that has diminished since last fall's global credit crisis. Structuring the deal as a global bond allows the company to offer the debt to a wider group of investors.

Ford Motor Credit said it planned to sell $10 billion of the global securities this year, and subsequently two to four times per year. Ford Motor Credit's treasurer, David Cosper, told

Reuters

that "we'd like to do the deal soon after the roadshow," stressing that market conditions would be the determining factor. Wall Street and bond investors began talking about the deal late last week, just after Thursday's Treasury rally.

"Its possible the dealers had taken it upon themselves to start those conversations with the investment community, but I find it unlikely that broker/dealers put it upon themselves to do that," the investor added.

Who knows? Bear, Merrill and Salomon all referred calls to Soze, er, Kinley. If you ask her, they wouldn't have had any reason to dispel the rumor that Ford was about to sell one of the year's largest bond transactions: "They probably didn't say anything because if there was no deal, there were no underwriters," said Kinley. "They're not going to comment on something they were never a part of."

Hmm. A woman who answered the phone at Merrill's syndicate desk, while declining to comment, didn't exactly sound like she'd never heard of such a deal. "I am the one working on it, but I cannot comment," she said, without identifying herself, before pausing to loudly inform the entire syndicate desk that any calls from the press should be referred to Ford. "Ford has asked us not to comment on their transaction," she said.

It's true that the bond offering was never officially "launched," a term used by those in the corporate bond market to indicate that underwriters are now actively soliciting bids from investors. But the premarketing stage of garnering interest had certainly begun, sources said.

But market conditions changed -- Treasury yields have widened by about 15 basis points since last Thursday -- and investors were less keen on buying corporate debt right at the end of the quarter because the added risk would hurt their performance.

It's possible that Ford may have been wary of announcing that it had "pulled" the deal, which indicates a lack of interest and is a term generally ascribed to less-than-stellar companies trying to sneak in and get financing, hoping investors don't notice what they've bought. But it's hard to fathom that these screwy market conditions would sully the reputation of the second-largest auto manufacturer in America. "Pulling a deal is a little bit of egg on the face," said the investor.

No, this is the whole omelet.