Scope rates Volkswagen on a subscription basis. To view Scope’s subscription rating and rating report, or to register, please click here.

Volkswagen International Finance N.V., guaranteed by Volkswagen AG, is offering a EUR 1bn perpetual tranche with a call at 5.75 years (December 2027) and a 3.75% yield, and a EUR 1.25bn perpetual with a nine-year call (March 2031) at a yield of 4.375%, according to Bond Radar (www.bondradar.com). Demand ended up at EUR 5.5bn and EUR 4.75bn, respectively.

Underwriters initially went out with price talk of 4.25% area and 4.875% yield area, tightening to 3.875% area and 4.50%-4.625% guidance before setting final terms through guidance. Proceeds are for general corporate purposes.

In its December rating report, Scope noted that while Volkswagen’s ratings are constrained by the group’s business risk profile, they are strongly supported by its financial risk profile, including a prudent financial policy. At the time of the rating report, Scope reported that Volkswagen’s global market share in light vehicles had improved slightly thanks to strong product momentum but commercial vehicles had lost some traction.

Group product diversification remains strong, reinforced by the fast expansion of the electrified portfolio, which is also the core focus of the ‘New Auto Strategy’ announced in July 2021. Planned investments in innovative vehicles capable of autonomous driving and ‘over the air’ software upgrades and updates will help ensure products remain in demand. Platform consolidation, group-wide economies of scale and synergies across group brands in terms of product development and manufacturing provide further support.

“The recently announced FY 2021 results confirmed the group’s strong resilience in a very challenging environment, thanks to solid price and mix, combined with continued cost reduction,” said Georges Dieng, lead analyst for Volkswagen. “The group also maintained a substantial net cash position in its automotive business at year-end 2021, which will help withstand the current market uncertainties.”