S&P upgrades Volkswagen

Standard & Poor’s said it raised to A/A-1 from A-/A-2 its long- and short-term corporate credit ratings on Volkswagen AG.

The outlook is stable.

S&P also raised the long- and short-term ratings on the company’s debt to A and A-1 from A- and A-2.

In addition, S&P raised to A/A-1 from A-/A-2 the long- and short-term ratings on Volkswagen’s “core” subsidiaries, captive finance entity Volkswagen Financial Services AG and its subsidiary Volkswagen Bank GmbH. S&P also raised to A from A- the long-term rating on finance subsidiary Volkswagen Group Services SA and the long-term issuer credit and financial strength ratings on captive insurer Volkswagen Insurance Co. Ltd.

The outlook on all these entities is stable.

S&P said the upgrade reflects S&P’s expectation that VW’s leverage metrics will steadily strengthen during 2015 and 2016, supported by gradual profitability improvements and positive free operating cash flow in the auto division.

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