FRANKFURT (Reuters) – Volkswagen’s (VOWG_p.DE) chief financial officer called on the European Central Bank (ECB) to accelerate purchases of short-term debt, the Financial Times reported on Friday.
FILE PHOTO: Volkswagen logo is seen at the LA Auto Show in Los Angeles, California, U.S., November 20, 2019. REUTERS/Lucy Nicholson
The German carmaker told the Financial Times that the ECB should send “clear signals” and purchase the short-term debt, which often matures in as little as six or nine months, “as soon as possible”. (bit.ly/2JlawiC)
The ECB last week said it will prop up markets, including through the purchase of commercial paper as part of a 750 billion euro ($828.30 billion) plan in extra asset purchases to contain the financial fallout from the coronavirus pandemic.
It remains unclear whether the ECB has started purchases of commercial paper. VW is one of Europe’s most regular corporate issuers of commercial paper.
“There’s a lot of pressure on the incoming money flow,” said VW Chief Financial Officer Frank Witter. “We have different diversified funding sources available, but not all of them are as liquid as they were,” he added.
Volkswagen has the capacity to issue up to 15 billon euros of this debt under its main funding program, with another 5 billion euros earmarked for short-term debt in a separate market in Belgium.
The group’s ringfenced financial services arm has an additional commercial paper program with a 2.5 billion euro limit.
Witter said that Volkswagen, which has yet to tap credit lines with banks in excess of 20 billion euros, considered that facility “a back-up” for when capital markets are shut.
In a separate interview with Boersen-Zeitung, Witter said the carmaker sees no need for tapping state aid to weather the current crisis.
Passenger car sales were down 40% in March, Witter told Boersen-Zeitung, adding that the company is reviewing whether the company’s annual general meeting can take place on May 7.
Volkswagen for now is sticking to its forecast of paying a dividend, but is questioning the need for all investments and spending needs, Witter told Boersen-Zeitung.
A VW spokesman confirmed the remarks made to the papers.
Reporting by Edward Taylor; Editing by Shounak Dasgupta