Volvo Cars has announced it is seeking to raise EUR500m from a bond issue, its first entry into the global corporate bond markets in its 89 year history. The Geely-owned company is starting a roadshow for potential investors this week.

Volvo Cars says it has secured corporate credit ratings from Standard & Poor’s (S&P) of BB with a positive outlook. Last week it posted a healthy set of Q1 financial results that showed a return to profitability.

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S&P said in its latest analysis of the company: “The company’s business risk profile is supported by a well-established market position as a mid-sized car manufacturer, being active in Western Europe, Asia, and North America, helped by a track record of safety, reliability, innovation, and technological expertise.

“We expect Volvo’s strategy will enable the company to benefit from stronger market demand, higher pricing and wider profit margins, which will improve its competitive position. We also envisage that the transition to more flexible and cost-efficient manufacturing platforms, which is currently underway, will support profitability and product quality.”

Volvo said the proceeds from the bond issue are being raised for “general corporate purposes and are aimed at increasing the company’s financial flexibility and diversifying its funding sources.”

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Håkan Samuelsson, president and chief executive of Volvo Cars, said: “Volvo’s global transformation is gathering pace. After a strong first three months of the year, both sales and profitability are expected to increase in FY2016 compared to last year.”

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