Volvo Said to Hire Banks for 1 Billion-Euro Refinancing Credit

Volvo AB, (VOLVB) the world’s second- largest truckmaker, hired banks to arrange a 1 billion-euro ($1.3 billion) credit line to refinance a deal maturing next year, according to two people with knowledge of the situation.

Citigroup Inc., DNB ASA, HSBC Holdings Plc and Svenska Handelsbanken AB are arranging the five-year revolving credit that will replace a $1.4 billion pact signed in 2006, said the people, who declined to be identified because the deal is private.

The company is offering to pay an initial interest rate of 85 basis points more than the euro interbank offered rate to draw funds under the credit line, said the people. It will also pay utilization fee ranging from 12.5 basis points to 50 basis points, the people said. A basis point is 0.01 percentage point.

Marten Wikforss, a spokesman at the Gothenburg, Sweden- based company, declined to comment.

Standard & Poor’s and Fitch Rating rank Volvo at BBB. Moody’s Investors Service rates it Baa2.

To contact the reporter on this story: Patricia Kuo in London at pkuo2@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net