Volkswagen returns to the green bond market

Volkswagen relaunches on the sustainable finance front. The German giant has launched the sale of two green hybrid bonds in euros, marking the start of a busy week for the corporate debt market. The transaction comes at a time of increased optimism in the markets, thanks to the detente signals between the US and China on the trade front.

The two tranches, issued by Volkswagen International Finance NV, are perpetual bonds with early redemption options in 2030 and 2033, respectively. The expected yields are around 6.25 per cent and 6.75 per cent, according to market sources. The proceeds will be used in part to refinance bonds maturing in 2025 and 2026 and, to an equal extent, for green projects compatible with the group's Green Finance Framework, which was updated in October 2022.

The initiative is part of a well-established strategy: Volkswagen has placed several green issues since 2020, with values between EUR 1.75 and 2 billion per transaction, focusing on projects related to electric mobility. The first issue dates back to September 2020, with EUR 2 billion divided into two 8- and 12-year tranches, used to develop the Meb platform and the ID.3 and ID.4 models. This was followed in March 2023 by a EUR 1.75 billion placement to refinance investments aligned to the EU taxonomy, while in September of the same year Volkswagen Leasing issued EUR 2 billion in green bonds linked exclusively to Bev vehicles. Since 2023, Volkswagen Financial Services AG has placed no fewer than 17 green bonds, reinforcing its commitment to the transition to zero-emission mobility. The main subscribers? ESG funds, pensions, insurance companies and international asset managers specialising in sustainability, with a strong European presence.

The bonds are expected to be rated Baa3 by Moody's Ratings, BBB- by S&P Global Ratings and BBB by Fitch Ratings. Barclays, Deutsche Bank, Mediobanca, NatWest Markets, Société Générale and UniCredit are acting as bookrunners for the transaction.