But credit analysts fear plan will backfire
27 July 2009

VW is examining ways of raising up to four billion Euros (£3.5bn) as part of its plan to buy Porsche.

Although VW has enough cash reserves to buy Porsche outright, it is eager to retain capital during the current difficult trading conditions.

However, there are concerns that by seeking to raise money VW could jeopardise its credit rating, compromising its ability to raise money in the future.

Ratings agencies are already said to be skeptical about the union of VW and Porsche, with many fearing that Porsche's estimated 10 billion Euros (£8.6 billion) of debt could compromise VW in the future.

These concerns have been exarcebated by fears that VW's sales will slump when European scrappage incentives begin to dry up in the next six months.

VW and Porsche plan to decide on the structure of the combined group by 13 August.

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