Volvo Cars today successfully placed its first green bond, raising EUR 500m from a diverse group of institutional investors and further increasing the company’s financial flexibility.
The proceeds of the bond will be used to fund the design, development and manufacturing of fully electric cars in line with the company’s recently established Green Finance Framework. A report will be issued annually to provide full transparency to investors.
The bond issue was oversubscribed 5 times, illustrating both the current market demand for green investment products and the financial community’s strong confidence in Volvo Cars’ strategy.
“I am very pleased that we successfully placed our first green bond,” said Carla de Geyseleer, Chief Financial Officer. “The financial community has a critical role to play in supporting sustainable development, including the transition to a low carbon economy. In this respect, it’s very encouraging to see so much investor interest in helping us electrify our fleet and deliver on our climate ambitions.”
Volvo Cars’ Green Finance Framework was reviewed by Cicero, a leading provider of independent, research-based evaluations of green bond investment frameworks, and received its highest possible rating, Dark Green.
Last year, Volvo Cars launched a comprehensive climate plan which addresses carbon emissions across all its operations and products, as it strives to become climate-neutral by 2040.
The plan goes beyond addressing tailpipe emissions through electrification; the company will also tackle carbon emissions in its manufacturing network and wider operations, its supply chain and through recycling and reuse of materials.
As a first tangible step towards its 2040 vision the company aims to reduce its lifecycle carbon footprint per car by 40 per cent between 2018 and 2025.
This includes a 50 per cent reduction in tailpipe emissions per car, a 25 per cent reduction per car in operational carbon emissions, including from manufacturing and logistics, and a 25 per cent reduction per car in supply chain carbon emissions.
The EUR 500m bond was issued under Volvo Cars’ Euro Medium Term Note programme. The bond matures in October 2027 and pays a fixed coupon of 2.5 per cent. The settlement date is expected to be 7 October 2020 and the bonds will be listed on the Luxembourg Stock Exchange. The bookrunners for the transactions were BNP, SEB and ING.
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”). The offer and sale of the Notes will be made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European Economic Area, from the requirement to produce a prospectus for offers of securities.
