By Nina Trentmann 

Volkswagen AG plans to the return to the bond markets Thursday for the first time since its emissions-cheating scandal, testing confidence after an 18-month hiatus.

The multibillion-euro bond issuance is a sign of Volkswagen returning to its traditional funding pattern, said Jörg Boche, head of group treasury, during a call with investors on Wednesday. The proceeds will be used for general purposes, he said.

"It is not that we are underfunded in terms of liquidity," Mr. Boche said, adding the issuance was an exciting moment for the company.

The German auto maker is expected to issue a multitranche Eurobond that could exceed EUR4 billion ($4.32 billion), according to a dealer involved in the transaction. The offering could feature two-year, floating-rate notes and fixed-rates notes stretching four, 6.5 and 10 years.

Volkswagen could also issue a hybrid- and a U.S. dollar-bond later this year, should the return to the euro benchmark bond market succeed, Mr. Boche said.

Thursday's bond launch can't easily be compared with previous issuances, because it is the first since the scandal, said Markus Steilen, a member of Commerzbank AG's credit syndicate business.

The move indicates that Volkswagen is optimistic it will be able to regain investor confidence, said Ferdinand Dudenhöffer, director of the Center Automotive Research at the University of Duisburg-Essen in Germany.

The company said Wednesday it was "not yet completely done" with the clear-up of the emissions scandal. Volkswagen could still resort to asset sales if necessary, Mr. Boche said.

In the aftermath of the cheating scandal, the company set up emergency credit facilities, including a EUR20 billion bridge loan, to cover its immediate financial needs. Volkswagen doesn't plan to extend the bridge loan, Mr. Boche said. The firm also relied on commercial paper and asset-backed securities instead of issuing new bonds, he said.

Despite various settlements in the U.S., additional costs could arise from shareholder suits, said Mr. Dudenhöffer. These could amount to as much as EUR10 billion, he said.

Volkswagen's automotive division had a net liquidity of EUR27.2 billion at the end of 2016, Mr. Boche said. The company expects double-digit billion outflows this year because of payouts required to settle the emissions scandal. The car manufacturer targets a net liquidity of between EUR15 billion and EUR20 billion for 2017, he said.

Shares of Volkswagen rose 1.7% to EUR136.70 on Wednesday, substantially up from the low of EUR92.36 they hit in early October 2015, two weeks after the emissions issues became public.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

(END) Dow Jones Newswires

March 22, 2017 16:02 ET (20:02 GMT)