Today, Volvo Cars successfully issued its second green bond in order to raise EUR 500 million from a variety of global investors. The bond was three times oversubscribed despite difficult global market conditions.
All proceeds will be used to fund and accelerate the company’s transformation towards becoming an all-electric automaker by 2030 and a climate-neutral and circular enterprise by 2040.
Over two-thirds of the proceeds will be invested in the research and development of electric powertrains and related new platform technology for the next generation of pure electric Volvo vehicles, while the remainder will be used to increase the company’s production capacity of fully electric vehicles.
The 500 million Euro senior unsecured fixed-rate green bond was issued under the Euro Medium Term Note programme of Volvo Cars. The bond matures on May 31, 2028, pays a fixed coupon of 4.25 percent, which is 291 basis points above mid-swap, and is listed on the Luxembourg Stock Exchange.
The successful placement indicates that sustainable investment opportunities are still in demand. Moreover, a threefold oversubscription demonstrates the investors’ confidence in not only Volvo Cars, but also 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 automaker to commit to full electrification, with the goal of selling only electric vehicles by 2030. It aims to have 50 percent of its global volume consist of pure electric vehicles by mid-decade.
Sustainalytics, a leader in independent ESG research, ratings, and data, has recently recognized Volvo Cars for its environmental, social, and governance (ESG) advancements. Volvo Cars has a Low Risk of experiencing material financial impacts due to ESG factors. Specifically, the company highlighted Volvo Cars’ efforts to manage its energy efficiency and reduce its carbon emissions.
Volvo Cars established a Green Finance Framework in accordance with the ICMA Green Bond Principles in the year 2020. This enables the company to fund its ambitious climate plans and electrification strategy through the issuance of green bonds or the acquisition of green loans, with all proceeds going toward climate-related and environmental projects. Volvo Cars successfully placed its first green bond and raised EUR 500 million from a variety of institutional investors shortly after the framework’s inception.
“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.”
