S&P ups Volvo

Standard & Poor's said it raised the long- and short-term corporate credit ratings on AB Volvo and its related entities to BBB/A-2 from BBB-/A-3, along with its Nordic scale rating to K-2 from K-3.

The outlook is stable.

The action reflects a view that Volvo's credit metrics will continue to show strong improvements in 2011 following similar strong performance during 2010 on the back of a strong rebound in profits and cash flows, as well as significant debt reduction, S&P said.

The ratings reflect expectations of continued improvements in demand for Volvo's products and services, mainly within the global truck and construction equipment sector and continued strong cash flow generation, the agency said.

The ratings are constrained by high volatility in demand, earnings and cash flow, S&P said, as well as historically generous shareholder distributions.

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