S&P rates Volkswagen hybrids BBB-

S&P said it assigned its BBB- long-term issue rating to the proposed two tranches of five-year non-call and nine-year non-call, perpetual, optionally deferrable, and subordinated hybrid notes to be issued by Volkswagen International Finance NV. Parent company Volkswagen AG on a subordinated basis will guarantee the notes.

The rating is based on the parent’s BBB+ issuer rating. S&P said it subtracts a notch for subordination and another for the option to defer interest.

The offering completion and size will be subject to market conditions, but the agency said it expects total issuance of up to €2 billion.

VW plans to use the proceeds to replace its €1.25 billion hybrid instrument, which has a first call date in June 2024.

The outlook is stable.

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