Volvo aims to raise €500 million in bond issue image

Volvo said it was seeking to raise extra cash from a bond issue, during the first foray into the global corporate bond markets in the automaker’s 89-year history.

The Swedish premium auto maker plans to raise 500 million euros (570.25 million dollars) in its first ever bond issue and it has begun a roadshow aimed at looking for potential investors on Monday this week. Volvo said “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.” As the company kept growing its business over recent years, it has managed to secure corporate credit ratings from Standard & Poor’s of BB with a positive outlook.

Volvo reported last week its earnings for the first quarter of the year rose to 3.1 billion Swedish crowns (381 million dollars), compared with a 11 million crowns loss (1.365million dollars) a year ago, while posting an operating margin of 7.5 percent for the period, compared with 0 percent a year earlier. “Volvo’s global transformation is gathering pace,” Hakan Samuelsson, president and chief executive, said. “After a strong first three months of the year, both sales and profitability are expected to increase in FY2016 compared to last year.”

As it seeks to further expand, the Geely-owned brand has set to spend 75 billion crowns in the coming years for the development of new models to try to catch up with more established premium makers, such as BMW and Mercedes.