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Volvo went out with initial price thoughts of 85bp over mid-swaps for its capped EUR 500m five-year bond. By mid-morning, pricing had tightened to guidance of MS+55bp plus or minus two basis points and the final spread was set at the tight end, at MS+53bp, according to Bond Radar (www.bondradar.com), as books swelled to over EUR 3bn.

Gennadij Kremer, lead analyst for Volvo, points to the company’s very solid financial risk profile reflected in a net cash position and strong positioning in heavy duty trucks.

“The big backlog of truck orders still to be delivered, which provides near-term visibility on revenues, and the expectation that Volvo will keep its Scope-adjusted EBITDA margin over 12% and maintain its net cash position at year-ends 2022 and 2023 support the issuer rating,” Kremer said. “Cyclicality in the truck and capital equipment industries and low product breadth compared to its main European peers VW and Daimler act as rating constraints.”

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