Refinancing

REFINANCING STRUCTURE OF THE VOLKSWAGEN GROUP
as of December 31, 2020

The Volkswagen Group used a variety of instruments and markets for its refinancing activities in 2020.

In September 2020, the Automotive Division of the Volkswagen Group successfully placed its first green bonds on the market, with a principal amount of €2.0 billion and terms of eight and twelve years. The green bonds are based on the Green Finance Framework presented in March 2020 for sustainability-oriented financial instruments. The resources will be allocated specifically to refinancing the Modular Electric Drive Toolkit (MEB) and the new completely battery-electric vehicles, the ID.3 and ID.4.

We strengthened net liquidity through the placement of unsecured subordinated hybrid notes with an aggregate principal amount of €3.0 billion. The notes are perpetual. One note with a principal amount of €1.5 billion can only be canceled by the issuer after five years, while the other with a principal amount of €1.5 billion cannot be canceled until nine years have elapsed. The transactions will be partly used to refinance the hybrid note with a principal amount of €1.25 billion that was issued in 2014 and canceled as of March 24, 2021.

In the US capital market, bonds with an aggregate principal amount of USD 4.0 billion each were placed with investors in May and November 2020. Notes with a volume of CAD 1.0 billion were issued in the Canadian refinancing market. In addition, private placements were placed under the automotive issuance program for the first time since 2015.

Official euro benchmark bonds with an aggregate volume of €2.15 billion were issued for the Financial Services Division. In addition to this, private placements were issued in various currencies and regions.

Alongside the placement of senior, unsecured bonds, asset-backed securities (ABS) transactions were another element of our refinancing activities. ABS transactions in the amount of approximately €3.2 billion were publicly placed in Europe. In addition, ABS transactions were issued in the USA, China and Japan.

The Volkswagen Group was also actively involved in the commercial paper market with several issuing companies.

The proportion of fixed-rate instruments in the past year was more than twice as high as the proportion of floating-rate instruments.

In our refinancing arrangements, we generally aim to exclude interest rate and currency risk as far as possible with the simultaneous use of derivatives.

The table below shows how our money and capital market programs were utilized as of December 31, 2020 and illustrates the financial flexibility of the Volkswagen Group:

Volkswagen AG’s syndicated credit line of €10.0 billion agreed in December 2019 was drawn down during 2020. Furthermore, the syndicated credit line was extended by one year by making use of the first extension option. There is an option to extend the term by a further year until 2026 at the latest, subject to the banks’ approval. This credit facility was unused as of the end of 2020.

Of the syndicated credit lines with a total of €12.7 billion at other Group companies, €1.3 billion has been drawn down. In addition, Group companies had arranged bilateral, confirmed credit lines with national and international banks in various other countries for a total of €4.8 billion, of which €0.6 billion was drawn down.