BERLIN -- Volkswagen Group's financial services business has sold a 5 billion ruble ($78 million) bond in Russia to fund its local operations, it said on Tuesday, its first issue in the country's battered debt market in almost two years.
New-car sales in Russia plunged 36 percent in 2015, in an economy hit by lower oil prices and Western sanctions over the Ukraine crisis. VW Group's Russia sales fell 37 percent last year.
Volkswagen Financial Services, which handles dealer and customer financing and the German group's banking and leasing business, said the ruble-denominated bond placed with investors had a five-year maturity and a 9.95-percent coupon.
"Despite the tense situation in Russia and related challenges, we are firmly committed to our engagement there," Frank Fiedler, the VW division's finance chief, said.
Rated BBB+ by Fitch Ratings and BB+ by Standard & Poor's, the bond is VW's first in Russia since two separate 5 billion-rubles placements in October 2014 and its fourth bond in the country to date, a spokesman said.
The operations of Brunswick-based Volkswagen Financial Services exclude the Scania and Porsche brands and distributor Porsche Holding Salzburg.
Europe's largest automaker built nearly 100,000 cars at its plant in Kaluga last year and has not scaled back operations in Russia, unlike rivals including General Motors which in 2015 idled an Opel factory in response to slumping demand. Last year, Volkswagen opened a new engine plant in the market.
"Russia has the potential to grow into one of the largest automotive markets in the world," VW said in its 2015 annual report published in April. "The market remains of strategic importance for the VW group which is why we are working intensively there."