Volvo signs second loan with China Development Bank

November 26, 2013 | 08:49

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Auto maker Volvo, the Swedish subsidiary of the Chinese-based Geely Group, has signed its second loan agreement with the China Development Bank.

(AFP/Karen Bleier)

STOCKHOLM: Auto maker Volvo, the Swedish subsidiary of the Chinese-based Geely Group, said on Monday it had signed its second loan agreement with the China Development Bank.

The $800 million (592 million euro) loan, with a maturity in 2021, "will support Volvo Car Group in further developing its product programme as well as strengthening the capital structure over the coming years," the company said in a press release.

The previous $922 million loan from the state-owned bank helped the firm pay back in advance another loan with the European Investment Bank.

Volvo, which has sustained losses since 2011, has high hopes for the Chinese market.

The company is about to start production in its second and third Chinese factories, and the Asian country will soon become Volvo's largest national market ahead of the United States, where sales are dropping.

China Development Bank is the first creditor of the company, which on June 30 this year had an approximate total debt of 9.5 billion kronor (1.06 billion euros, $1.44 billion) with financial institutions.

AFP

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