S&P assigns BBB+ to Volkswagen notes

Standard & Poor's said it assigned its BBB+ long-term issue rating to the proposed seven- and 15-year non-call, perpetual, optionally deferrable and subordinated hybrid notes to be issued by Volkswagen International Finance NV under the guarantee of the parent company Volkswagen AG (VW; A/stable/A-1).

The completion and size of the transaction will be subject to market conditions, but the agency anticipate up to €3 billion of total issuance.

VW plans to use the proceeds for general corporate purposes.

Including this new issue, the agency estimates a ratio of outstanding hybrids to adjusted capitalization in the 5%-10% range, hence comfortably within the 15% level mentioned in its hybrid criteria. (S&P excludes €3.7 billion of mandatory convertible bonds already issued).

S&P said it classifies the proposed notes as having "intermediate" equity content until their first call dates in 2022 and 2030, respectively, because they meet its criteria in terms of their subordination, permanence and optional deferability during this period.

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