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Annual Report

Refinancing

2010 saw a significant improvement in the Volkswagen Group’s net liquidity. In addition to operating activities, the successful capital increase in the first half of the year made a key contribution to this. As a result, the Automotive Division’s refinancing requirements from money and capital market bonds were substantially reduced as against the previous year.

In 2010, Volkswagen was regularly active in the capital markets via the Financial Services Division, placing public benchmark bonds and issuing asset-backed securities (ABSs). The Group issued a total of €2.5 billion via three benchmark bonds and €1.0 billion in public ABS transactions in the European capital markets. A further USD 2.4 billion was securitized for investors in the USA.

In addition, the Volkswagen Group further extended its strong position as an issuer in August 2010 by issuing its largest bond in the US capital market. Volkswagen obtained advantageous price conditions in the US market to attractively refinance its growing business in the country. We placed a total of USD 1.75 billion in two tranches with maturity periods of three and ten years respectively, with the ten-year bond being used exclusively to develop the new plant in Chattanooga/Tennessee. In November, Volkswagen also implemented its most significant bond issue to date in the Canadian capital market. In an attractive market environment, investors acquired a total volume of CAD 550 million of the issue, which was many times oversubscribed.

These transactions enabled Volkswagen to tap into new investor groups in the major North American refinancing markets and give it a broad base from which to flexibly optimize its financing requirements in the long term.

Independently of the above public transactions, the Volkswagen Group also took advantage of additional investor interest by engaging in a large number of private placements in the money and capital markets. The following overview provides information about the utilization of our money and capital market programs as of December 31, 2010:

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Programs

 

Authorized volume € billion

 

Amount utilized on Dec. 31, 2010 € billion

Commercial Paper

 

23.6

 

3.9

Medium Term Notes

 

59.7

 

25.8

Other capital market programs

 

10.5

 

1.6

Asset Backed Securities

 

40.0

 

9.6

In the credit market, Volkswagen successfully maintained its comprehensive facilities provided by confirmed credit lines. In this regard, the Group’s as yet unused syndicated facility of €7.8 billion will continue to be available as before until June 2012.

The cash holdings, short- and long-term credit lines, and the available money and capital market programs continue to offer the Volkswagen Group a very high degree of financial flexibility, thereby enabling it to cover its refinancing requirements and ensuring that it remains solvent at all times.

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