By Eleanor Duncan

LONDON, Sept 30 (IFR)Investors showed up in strength for Volvo Car’s debut green bond, proceeds from which will support its strategy towards more electric cars and a reduction in greenhouse emissions.

Active bookrunners BNP Paribas, ING (B&D) and SEB launched the seven-year fixed rate note at 2.5%, cutting the yield from initial price thoughts of 2.875% area on the back of an over-€2bn order book. Guidance was 2.625% area.

The company, which is owned by Zhejiang Geely Auto Group, kicked off two days of marketing on Monday.

Bankers speaking prior to the deal’s launch said that Volvo’s Ba1/BB+ (negative/stable) ratings put it in a sweet spot of appealing to three groups of potential buyers: investment-grade investors looking for extra yield, high-yield portfolios and dedicated green accounts.

“Volvo is a classic crossover name,” said a banker familiar with the deal.

“It’s the higher end of the non-IG market, and we’re trying to target the IG guys who play in that space who, over the past few years have become not so much tourists, but having holiday homes in [the junk bond] space.”

Volvo laid out its green ambitions in a framework released last week.

The company is aiming to cut its lifecycle greenhouse gas emissions per car by 40% from 2018 to 2025. It also wants 50% of all its sales to be electric cars by 2025. And by 2040, Volvo wants to be completely “climate neutral”.

Funds raised under the framework will be earmarked for the research, development and investments related to electric cars and also to increase manufacturing capacity for batteries.

One high-yield investor said he was ignoring the green label, noting that money is ultimately fungible. He said he was being more cautious around auto credits because of the recent impact of

By Christoph Steitz and Alexander Hübner

FRANKFURT/MUNICH (Reuters) – Shares in Siemens Energy

opened lower than expected on their first day of trading on the Frankfurt stock exchange, as Germany’s biggest-ever spin-off gears up for a challenging future independent from parent Siemens


Shares in Siemens Energy – which makes gas turbines, power transmission systems and holds a 67% stake in Siemens Gamesa

– opened at 22.01 euros apiece on Monday, giving the company a market value of 16 billion euros ($18.6 billion).

A source had previously said estimates were for a market valuation of between 21-22 billion euros.

Shares eventually closed at 21.21 euros, down 3.6% from the first price, after trading in a range of 19.21-22.98 euros during the session. This puts Siemens Energy’s market capitalisation at 15.4 billion euros.

“I have repeatedly pointed out that we expect volatility to be high in the first few weeks,” Siemens Chief Financial Officer Ralf Thomas told Reuters. “It’s not a situation specific to Siemens Energy, it’s the same with every spin-off.”

Siemens Energy is Germany’s largest spin-off ever, even surpassing Lanxess

and Covestro <1COV.DE>, which were both spun off from Bayer


For Siemens AG investors the deal has paid off: They have received one Siemens Energy share for every two shares they own in the former parent. Yet Siemens shares traded only 1.7% below Friday’s closing price, a tiny discount given a substantial part of the conglomerate has been spun out in a separate listing.

Thomas said it would take until at least mid-October to get a first idea of how Siemens Energy, which competes with General Electric

and Mitsubishi Heavy Industries <7011.T>, will be valued.

Spun off from Siemens due to weak profit margins, the unit is expecting an adjusted margin of not more than 1% in 2020