Bond investors were happy to take a ride with Ford Motor Co. by buying into its recent issuance of billions of dollars in debt. Fearing what's under the hood, shareholders already are giving up their seats.

The Dearborn, Mich., auto maker and its Ford Motor Credit financing arm raised $26 billion in debt in recent weeks. The offerings, which included Ford Motor's $23 billion in loans and convertible bonds and a $3 billion high-yield bond issue by Ford Motor Credit, drew so many eager investors that the issuers increased the size of the deals and managed to borrow at lower interest rates than originally planned.

Ford Motor Credit, for example, got a rate of 8.25 percent on a $1.5 billion, 10-year chunk of its $3 billion bond issue, instead of the 8.375 percent coupon it initially offered.

The successful offerings and their attractive pricing transformed some skeptical bond investors and analysts into optimists about Ford's prospects. The specter of a default that would tip Ford into Chapter 11 bankruptcy protection looms less large now as bond investors feel confident the company has enough cash to start turning itself around while making good on the debt. And in the event that the auto maker does file for bankruptcy protection, bondholders would take precedence over shareholders in a payout from any restructuring.

"We feel confident they'll be able to continue to fund their research and other expenditures into the future while keeping up their bond payments," said Dan Ilany, fixed-income auto analyst at Bear Stearns Cos., one of the underwriters of the convertible-bond deal.

"Whether they'll be able to make an acceptable return on equity for their investors is another question," he added.

Shareholders have little to be cheerful about, although the stock rose 3.3 percent to $7.11 Thursday in 4 p.m. New York Stock Exchange composite trading after a Merrill Lynch & Co. analyst upgraded the shares to "hold" from "sell." Merrill said the available cash buys time for Ford to restructure and the stock soon could recover from a short-term fall.

The shares slipped back to $7.08 Friday. Like rival General Motors Corp., Ford has struggled with declining market share in the important North American market, too much capacity and high costs that weigh on its ability to compete effectively.

Ford's shares have fallen more than 50 percent since the start of 2005. Since the start of this month, the stock has tumbled 12 percent, and the company's market value has fallen in just two weeks to about $13.3 billion from about $15.2 billion. In May 1999, Ford's market value was nearly $81 billion.

"If we execute and deliver on our plans, the share price takes care of itself," said Oscar Suris, a Ford spokesman. "With the funding we've secured, we now believe we have enough liquidity to address our operating and restructuring needs, to continue to invest in new products, and to act as a cushion in the event of a recession or any other event that could affect the business."

Ford has said it expects to continue posting losses through 2008, leaving investors and analysts with no way of valuing the company on a price-to-earnings basis. Ford also announced it would have negative free cash flow -- the cash left over after the costs to keep the company running -- through 2009. Over the next three years, the company expects cash outflows of $17 billion to support $10 billion for operations and $7 billion for restructuring. Even with its fresh borrowings of $23 billion, the company will have little margin for error.

"If they don't get it right, they'll be stuck with a massive debt load that will be difficult to repay if they're not generating cash from operations," said John Novak, an auto analyst at Morningstar Inc. in Chicago. Morningstar has a "speculative risk" rating on the stock, Mr. Novak added, because "this is a stock that's going to trade on speculation and rumor in the next year or two."

One reason for the recent drop in the share price is Ford's issuance earlier this month of $4.5 billion in unsecured bonds that can be converted into its shares, part of the $23 billion in debt issued. The offering was snapped up mainly by "convertible-arbitrage" investors who sold Ford shares to hedge their exposure to movements in the stock price, according to people familiar with the deal.

Convertible-arbitrage allows investors to profit from movements of convertible bonds against other securities. It often involves trades using credit-default swaps, which are derivative contracts that protect buyers in the case of a bond default. Investors also can hedge against a decline in the price of a convertible's underlying shares, as in the latest Ford case, by selling shares in the open market. The more movement there is in the issuer's securities, the more opportunity to trade.

The volume of debt issued by Ford and other auto makers is "so large and diverse that it amounts to an amusement park for bond traders," said David Feinman, a portfolio manager at Havens Advisors, a New York hedge fund that invests in distressed debt.

Jon Rogers, an auto analyst at Citigroup Inc. in New York, said he is concerned that even the new cash pile and Ford's commitment to restructuring may not be enough to make the stock worthwhile for shareholders over the next three years. The company has to significantly improve its sales in North America and negotiate tough concessions from the auto-workers' union next year to help lower its costs -- neither of which is a sure thing, he said. In the meantime, it has to start generating free cash flow to service its debt.

"Even if investors are patient enough to ride out 2007-2008, the 2009 picture is not telling of a Ford Motor Company that is by any means out of the woods," Mr. Rogers said. Citigroup, which has done investment banking for Ford over the past 12 months, has a "speculative hold" rating on Ford shares.