Volvo Cars planning €500m (Rs 34,129.9 crore) bond issue

Volvo Cars, the premium car maker, has announced it is seeking to raise Euros 500m (Rs 3798 crore) from a bond issue, its first foray into the global corporate bond markets in its 89 year history. The Swedish company will begin a road show for potential investors on May 9, 2016.

Volvo Cars has secured corporate credit ratings from Standard & Poor’s (S&P) of BB with a positive outlook.

S&P said in its analysis: “The Company’s business risk profile is supported by a well-established market position as a mid-sized car manufacturer, being active in Western Europe, Asia, and North America, helped by a track record of safety, reliability, innovation, and technological expertise.

 “We expect Volvo's strategy will enable the company to benefit from stronger market demand, higher pricing and wider profit margins, which will improve its competitive position. We also envisage that the transition to more flexible and cost-efficient manufacturing platforms, which is currently underway, will support profitability and product quality.”

The proceeds from the bond issue are being raised for general corporate purposes and are aimed at increasing the company’s financial flexibility and diversifying its funding sources.

Earlier this week Volvo Cars announced a robust start to 2016 with revenues for the quarter up 24 per cent year-on-year to SEK41.7bn (Rs 34,129.9 crore approximately), generating an operating profit of SEK3.1bn (Rs 2537 crore approx.)  and an operating profit margin of 7.5 per cent.

Hakan Samuelsson, president and chief executive of Volvo Cars, said: “Volvo’s global transformation is gathering pace. After a strong first three months of the year, both sales and profitability are expected to increase in FY2016 compared to last year.”

Source: Volvo