Volvo Cars said on Wednesday it successfully placed its first green bond, “raising €500 million from a diverse group of institutional investors and further increasing the company’s financial flexibility.”

The proceeds of the bond will be used to fund the design, development and manufacturing of fully electric cars in line with the company’s recently established Green Finance Framework.

The bond issue was oversubscribed five times, illustrating the current market demand for green investment products.

Volvo Cars has been owned by China’s Zhejiang Geely Holding since 2010.

In 2019, Volvo Cars employed 41,500 full-time employees.

Volvo Cars’ head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden.

Volvo Cars’ head office for APAC is located in Shanghai.

The company’s main car production plants are located in Gothenburg, Ghent, South Carolina, and Chengdu and Daqing in China, while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China) and body components in Olofström (Sweden).

“I am very pleased that we successfully placed our first green bond,” said Carla de Geyseleer, Volvo Cars Chief Financial Officer.

“The financial community has a critical role to play in supporting sustainable development, including the transition to a low carbon economy.

“In this respect, it’s very encouraging to see so much investor interest in helping us electrify our fleet and deliver on our climate ambitions.”

Volvo Cars’ Green Finance Framework was reviewed by Cicero, a provider of independent, research-based evaluations of green bond investment frameworks, and received its highest possible rating, Dark Green.

Last year, Volvo Cars launched a comprehensive climate plan which addresses carbon emissions across all its operations and products, as it strives to become climate-neutral by 2040.

The plan goes beyond addressing tailpipe emissions through electrification — the company will also tackle carbon emissions in its manufacturing network and wider operations, its supply chain and through recycling and reuse of materials.

The €500m bond was issued under Volvo Cars’ Euro Medium Term Note programme.

The bond matures in October 2027 and pays a fixed coupon of 2.5%.

The settlement date is expected to be October 7, 2020, and the bonds will be listed on the Luxembourg Stock Exchange.

The bookrunners for the transactions were BNP, SEB and ING.