Volkswagen's emission scandal will not be an easy or quick problem to fix. Along with fixing a number of vehicles, the automaker will be facing a large amount of fines from various governments and possibly payouts from lawsuits. To make sure they have enough money to cover all of this, Volkswagen is reportedly is taking out some short-term loans.
Bloomberg has learned from two sources that the German automaker will meet with a number of banks tomorrow to apply for 20 billion euros (about $21.5 billion) in short-term loans to act as a buffer for upcoming fines. The hope is to have the loans by the end of this year.
“It makes perfect sense” to shore up financing, said Sascha Gommel, analyst for Commerzbank AG.
“In order to protect their rating, they need to show that liquidity will never become an issue for them, because then you have a vicious circle. If the ratings agencies think you won’t have cash and they downgrade you, then your funding gets more expensive.”