Volvo raises €500M through second green bond funding to accelerate transformation to fully electric car maker by 2030, become climate neutral by 2040; two-thirds of proceeds to fund electric powertrain R&D, remainder to boost EV production capacity

Sample article from our Automobile Industry

May 25, 2022 (press release) –

GLOBAL ANNOUNCEMENT

Volvo Cars today successfully placed its second green bond to raise EUR 500m from a diverse set of global investors. The bond was oversubscribed three-times, despite challenging global market conditions.

All proceeds are earmarked for funding and accelerating the company’s transformation towards becoming a fully electric carmaker by 2030 and becoming climate neutral and circular by 2040.

Over two thirds of the proceeds will fund the research and development of electric powertrains for next generation pure electric Volvo cars as well as related new platform technology, while the rest will be invested in boosting the company’s production capacity of fully electric cars.

The EUR 500m 6-year fixed rate senior unsecured green bond was issued under Volvo Cars’ Euro Medium Term Note programme. The bond matures on 31st May 2028, pays a fixed coupon of 4.25%, equivalent to 291 basis points above mid-swap, and will be listed on the Luxembourg Stock Exchange.

The successful placement shows that there is still a demand for sustainable investment opportunities. Above all, a three-time oversubscription illustrates the strong trust that investors put not only in Volvo Cars, but also in the company’s climate plans and electrification strategy.

“Sustainability is central to our purpose and business, and key to our future success,” said Björn Annwall, chief financial officer at Volvo Cars. “The high interest for our green bond is encouraging and a clear sign that the market believes in Volvo Cars and the investment plans we’ve developed to deliver on our climate ambitions. It also reaffirms our commitment to the Paris Climate Agreement and to become a climate neutral company.”

Volvo Cars was the first established car maker to commit to full electrification and aims to sell only pure electric cars by 2030. By mid-decade, it aims for half of its global volume to consist of pure electric cars.

Recently, Volvo Cars was recognised for its environmental, social and governance (ESG) progress by Sustainalytics, a leading independent ESG research, ratings and data firm. Volvo Cars was assessed to be at Low Risk of experiencing material financial impacts from ESG factors. In particular, the firm highlighted Volvo Cars’ work to manage its energy efficiency and to limit its carbon output.

In 2020, Volvo Cars established a Green Finance Framework in alignment with the ICMA Green Bond Principles. This allows the company to fund its ambitious climate plans and electrification strategy by issuing green bonds or obtaining green loans, where all proceeds will be used for climate-related and environmental projects. Shortly after the creation of the framework, Volvo Cars successfully placed its first green bond and raised EUR 500m from a diverse group of institutional investors.

“With our green bonds, we offer more opportunities to investors,” said Björn Annwall. “You can support our electrification and climate ambitions by becoming a shareholder – or by making a sustainability-focused investment through our green bonds. The financial community has a critical role to play in driving sustainable development, and we plan to continue to offer sustainable financing and investment opportunities in the future as we shift towards full electrification.”

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The Notes will be offered pursuant to Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"). There is no assurance that the offering will be completed or, if completed, as to the terms on which it is completed. The Notes to be offered have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or unless pursuant to an applicable exemption from the registration requirements of the Securities Act and any other applicable securities laws. This press release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which, or to any person to whom, such offer, solicitation or sale would be unlawful.

This announcement does not constitute and shall not, in any circumstances, constitute a public offering nor an invitation to the public in connection with any offer within the meaning of Regulation (EU) 2017/1129 (the "Prospectus Regulation"), including as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018. The offer and sale of the Notes will be made pursuant to an exemption under the Prospectus Regulation, as implemented in Member States of the European Economic Area and the United Kingdom, from the requirement to produce a prospectus for offers of securities.

In the United Kingdom, this announcement is being distributed to, and is directed at, only (a) persons who have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); (b) high net worth companies, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; or (c) persons to whom an invitation or inducement to engage in an investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). The investments to which this announcement relates are available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such investments will be available only to or will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Persons distributing this announcement must satisfy themselves that it is lawful to do so.

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Volvo Cars in 2021
Volvo Car Group recorded an operating profit of 20.3 BSEK. Revenue in 2021 amounted to 282.0 BSEK, while global sales reached 698,700 cars.

About Volvo Car Group
Volvo Cars was founded in 1927. Today, it is one of the most well-known and respected car brands in the world with sales to customers in more than 100 countries. Volvo Cars is listed on the Nasdaq Stockholm exchange, where it is traded under the ticker “VOLCAR B”.

Volvo Cars aims to provide customers with the Freedom to Move in a personal, sustainable and safe way. This is reflected in its ambition to become a fully electric car maker by 2030 and in its commitment to an ongoing reduction of its carbon footprint, with the ambition to be a climate-neutral company by 2040.

As of December 2021, Volvo Cars employed approximately 41,000 full-time employees. Volvo Cars' head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars' production plants are located in Gothenburg, Ghent (Belgium), South Carolina (US), Chengdu, Daqing and Taizhou (China). The company also has R&D and design centres in Gothenburg, Camarillo (US) and Shanghai (China).

For further information please contact:
Volvo Cars Media Relations
+46 31-59 65 25
media@volvocars.com

Volvo Cars Investor Relations
Alexander Petrofski
+46 31-793 94 00

investors@volvocars.com

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Regulatory Notices
Descriptions and facts in this press material relate to Volvo Cars' international car range. Described features might be optional. Vehicle specifications may vary from one country to another and may be altered without prior notification.
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