(Bloomberg) -- Volvo AB is proving that Europe’s sleepy market for new corporate-bond issues is still open -- as long as the returns are high enough to lure investors in.

Volvo Treasury AB, the financing arm of the vehicle maker and one of Sweden’s biggest corporate-bond issuers, pulled in more than 3 billion euros ($3 billion) of bids for a 500 million-euro note -- a coverage ratio of six times, according to a person with knowledge of the matter, who asked not to be identified as the information is private. The demand allowed Volvo to slash the spread offered to buyers at a time when sales of corporate debt in Europe are plunging and markets are recovering from the steep bond selloffs earlier this year.

The bonds will price at a spread of 53 basis points above midswaps, well below its opening target of about 85 basis points. The revised pricing is about 9 basis points above Volvo Treasury’s outstanding debt curve, according to data compiled by Bloomberg.

The deal provides a test of a market where European businesses have been hesitant to borrow, with rising interest rates from the world’s central banks and surging inflation stoking concerns about a steep drop in economic growth. That’s resulted in one of the slowest markets for new bond issues in Europe in years, with sales by non-financial corporations down about 40% from a year ago.

The Volvo sale is the first from a European firm outside of the finance industry since August 2, according to data compiled by Bloomberg, and it comes after a global rally pushed a gauge of corporate default risk to the lowest in more than two months.

A Volvo Treasury spokesperson wasn’t immediately available for comment when contacted by phone.

Volvo Treasury’s sale is expected to price later on Thursday. It’s the borrower’s third foray into Europe’s publicly syndicated debt market this year, the data show. A 2025 maturity euro note priced by Volvo Treasury in May has tightened around 20 basis points since it was issued.

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