BERLIN: A week after it admitted to cheating on US emissions tests for years, Volkswagen AG’s pain is beginning to spread throughout Europe’s credit markets.
The Bank of France stopped trading two securities backed by Volkswagen auto loans on Friday, while executives of parts supplier Schaeffler AG found themselves fielding questions about their biggest customer as they drum up support for an initial public offering, according to people familiar with the matters.
Since Volkswagen admitted Sept 18 that it had cheated on US air pollution tests since 2009, its chief executive officer resigned, the company became the target of a joint investigation by 27 US states and the stock price tumbled 28%.
Matthias Mueller, the former Porsche chief who was appointed Volkswagen’s CEO Friday, said his most urgent task is to win back trust for the company. “Under my leadership, Volkswagen will do everything it can to develop and implement the most stringent compliance and governance standards in our industry,” he said in a statement.
On Saturday, Suzuki Motor Corp said it sold all the shares it held in Volkswagen to Porsche Automobil Holding SE, following the end of a four-year dispute over a failed partnership with VW.
The two Volkswagen-related securities weren’t in an updated list the Bank of France distributed on Friday after being included in the original version sent to investors earlier this week, said the people, who asked not to be identified because they aren’t authorised to discuss the matter publicly.
The Bank of France is buying asset-backed securities under a European Central Bank purchase programme designed to help boost lending in the eurozone. An official for the Paris-based bank declined to comment on the purchase-offer list.
Volkswagen Financial Services has 22.8 billion euros (US$25bil) of outstanding asset-backed debt, according to a September presentation on its website.
Marc Siedler, a spokesman for the finance unit, declined to comment in an e-mailed statement.
Herzogenaurach, Germany-based Schaeffler announced IPO plans on Monday. Concerns about the impact of the Volkswagen issue, as well as Chinese and global market volatility, could affect investor views on the IPO valuation, according to the two people.
A representative for Schaeffler declined to comment.
The company is planning to set a price range for the offering as soon as today as it criss-crossed Europe to market the shares to investors from London to Zurich, the people said.
Schaeffler is telling investors that its products aren’t involved in the scandal and any decline in Volkswagen car production will have an insignificant impact on sales, according to two of the people. The automotive supplier is also saying that it’ll benefit from a possible shift to hybrid and more efficient gas vehicles because its products help meet higher technology demands, they said.
An IPO could raise as much as 3 billion euros, people familiar said. – Bloomberg
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