Volvo Sells $563 Million Bond on Tariff Concerns
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Volvo Treasury AB is selling a five-year, $563 million bond on May 9, as automaker-related notes hit the market amid the looming risk of tariffs.
The subsidiary of commercial vehicle manufacturer Volvo AB is offering a spread of around 120 basis points above mid-swaps at initial price thoughts, according to a person familiar with the matter who asked not to be identified.
The offering presents a test of investor demand for an auto sector facing the impact of U.S. trade tariffs. Volvo last month lowered its forecast for North America’s heavy-duty truck market for the year. The uncertainty surrounding tariffs and .U.S emissions legislation has caused customers to adopt a “wait-and-see approach,” the firm said.
Around 72% of Volvo’s revenue is derived from Europe and North America, two markets that could be flat to down this year, according to Bloomberg Intelligence.
Elsewhere, Canadian auto parts supplier Magna International Inc. is holding a series of investor calls starting on May 12 ahead of a potential euro and dollar bond sale, a separate person familiar said.
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A starting new issue premium of about 45 basis points on Volvo’s deal could tighten, according to Bloomberg Intelligence analysts Stephane Kovatchev and Christopher Ciolino. “We remain cautious on the Swedish company’s 2025 trends due to tariff risks and softening demand in a cyclical industry,” they wrote. The historical compression of initial price talk to launch for the issuer averages about 30 basis points, they added.
Bank of America Corp., Credit Agricole SA, Deutsche Bank AG, and Nordea are managing the deal. The bond is expected to be rated A2 by Moody’s Ratings and A by S&P Global Ratings, and may price later May 9.
This story was produced with the assistance of Bloomberg Automation
