* VW says extends bank credit line until June 2017
* VW says will return to bond market in due course
* VW debt market return after U.S. emissions deal - sources
* VW to issue multi-billion-euro bond in early 2017 -source
(Adds company comment, detail and background)
By Arno Schuetze and Andreas Cremer
FRANKFURT, Nov 28 Volkswagen has
agreed to extend a 20 billion-euro ($21.2 billion) bank credit
line, it said on Monday, part of the German carmaker's efforts
to maintain its financial strength while it counts the full cost
of its emissions scandal.
Europe's largest automaker secured the one-year bridge loan
last December after the biggest corporate scandal in its history
wiped billions off its market value and made it much more
expensive for Volkswagen (VW) to borrow in the debt market.
"We have now decided to extend the credit line until June
2017," VW told Reuters in an email.
The credit line will protect the financial framework for the
group's operations and increase its financial flexibility, the
VW faces a record-breaking corporate settlement with
regulators and vehicle owners in the United States where in
September 2015 it was found to have cheated diesel engine
A U.S. judge last month approved VW's $14.7 billion
settlement with authorities and owners of 475,000 polluting
2.0-litre diesel cars and is due to discuss proposals for
buybacks and fixes for 80,000 3.0-litre vehicles on Wednesday.
VW said it will return to the unsecured bond market in due
course and was still taking advantage of ABS (asset-backed
securities) transactions and commercial paper.
Two sources in the financial industry told Reuters that VW
had drawn up to half of the loan by the summer, but the carmaker
said the bridging loan was currently undrawn.
Sources had told Reuters in April that VW was hoping to
return to the bond market as early as May of this year as it
sought to replace the costlier bank borrowing.
At the time it decided against a such move. But VW is still
looking to return to the bond market and once a settlement deal
for its 3.0-litre diesel engines is approved by the U.S. court,
it should be able to outline its emissions scandal liabilities
in a bond prospectus, the sources said.
VW and lawyers for owners of larger diesel cars agreed
earlier this month on a buyback of about 20,000 older vehicles
and a software fix for 60,000 newer models.
Volkswagen's credit rating has suffered since the emissions
scandal broke. S&P, for example, downgraded the carmaker in two
steps to BBB+ from A. That compares with an A rating for Daimler
and A+ for BMW.
"Theoretically Volkswagen could launch a bond sale in
December, but they'll wait for the best market window," one of
the sources said, adding that the company was flush with cash.
The second source said that VW is most likely to resume its
borrowing on capital markets early next year by launching a
($1 = 0.9446 euros)
(Editing by Alexander Smith)