The decision was prompted by the direct linkage – that the rating agency chose to apply – of Volvofinans’s own rating to that of Ford Motor Company. In the opinion of Volvofinans, this linkage does not adequately reflect Volvofinans’s stand-alone credit quality, which is based on the following facts:
- Volvofinans is a true joint venture and is owned in equal part by the Swedish Volvo dealers (50 %) and Ford Credit International Inc (50 %).
- The Board is composed of three representatives from each owner plus a neutral chairman.
- Volvofinans is not consolidated.
- As an authorized credit market company, Volvofinans is subject to the supervision of the Swedish Financial Supervisory Authority.
- Under Swedish law, our owners’ creditors have no access to Volvofinans’s assets.
- Volvofinans conducts diversified lending operations and financing of new Volvo cars accounts for 35 % of total lending.
- Volvofinans’s operations are conducted without any notable Ford involvement, and the company maintains its own, independent borrowing operations.
- Volvofinans’s operations are flourishing, with a very low level of loan losses and a stable earnings trend.
Volvofinans will continue to obtain ratings from Moody’s Investors Service, which emphasize Volvofinans’s stand-alone credit quality to a greater extent. This is based, among other factors, on the company’s legal structure, governance, risk management and funding. Currently, Volvofinans has an A3 credit rating from Moody’s for long-term borrowing and a P-2 rating for short-term borrowing.
Information about this change will also be provided to investors via the Swedish Central Securities Depository (VPC).
Gothenburg, 30 August 2005
AB VOLVOFINANS (publ)
For further information, please contact:
Bert Björn, President, +46 (0)31 83 88 12
Press SP english 2005.pdf