Swedish automotive manufacturer Volvo Cars successfully placed its second green bond to raise EUR 500 million 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, said a company statement.
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, stated Volvo.
“Sustainability is central to our purpose and business, and key to our future success,” said Björn Annwall, CFO, 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.”
In 2020, the company 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, the Swedish automaker placed its first green bond and raised EUR 500 million 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.”
According to a company release, the EUR 500 million 6-year fixed-rate senior unsecured green bond was issued under Volvo Cars’ Euro Medium Term Note program. The bond matures on 31 May 2028, pays a fixed coupon of 4.25%, equivalent to 291 basis points above mid-swaps, and will be listed on the Luxembourg Stock Exchange.
Volvo Cars were 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.