AB Volvo has successfully issued a hybrid bond via its wholly owned subsidiary Volvo Treasury AB, amounting to EUR 1.5 bn in order to further strengthen the Group’s balance sheet and prolong the maturity structure of the debt portfolio. Settlement of the bond issue is scheduled to take place on December 10 2014, subject to customary conditions. The hybrid bond will be accounted for as a loan and subordinated to all other financial liabilities currently outstanding. The hybrid bond will be eligible for 50% equity treatment from both Moody’s and S&P when calculating Volvo´s credit ratios.
The hybrid bond, which is expected to be rated two notches below AB Volvo’s senior rating, i.e. Ba1 (Moody’s) and BB+ (S&P) consists of two tranches:
- EUR 0.9 bn, with a first call after 5.5 years and a maturity in 60.5 years. This tranche carries an initial coupon of 4.20%.
- EUR 0.6 bn, with a first call after 8.25 years and a maturity in 63.25 years. This tranche carries an initial coupon of 4.85%.
