Volkswagen aiming to return to debt market as early as May: sources

Mon Apr 11, 2016 10:06am EDT
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By Arno Schuetze and Alex Chambers

FRANKFURT (Reuters) - Volkswagen is hoping to return to the bond market as early as May, people familiar with the matter said, aiming to raise billions of euros to replace the costly bank loan it has been relying on in the wake of its emissions test cheating scandal.

Europe's biggest carmaker has been effectively shut out of the unsecured bond market since September, when it admitted to rigging U.S. diesel emissions tests.

Investors have been put off by uncertainty over the costs of the scandal, which could run into tens of billions of euros in regulatory fines, vehicle refit costs and lawsuits. That has left the German company relying on an expensive 20 billion euro ($23 billion) bridging loan agreed with banks in December.

With the publication of its annual results on April 28, however, Volkswagen (VW) hopes to provide some clarity on costs.

"Volkswagen has started talking to banks, and a first issuance may take place right after the publication," one of the sources said, speaking on condition of anonymity as the matter isn't public.

"The provisions figure (VW's estimated cost of the scandal) will enable bond investors to do their math," another said.

A VW spokesman said on Monday the company expected to issue debt on capital markets before the end of June.

Ahead of its results, VW (VOWG_p.DE: Quote) and U.S. regulators have been set an April 21 deadline by a federal judge to agree a fix for the nearly 600,000 cars affected in the United States.   Continued...

Signage at a Volkswagen dealership is seen in London, Britain, March 30, 2016. REUTERS/Toby Melville