Geely Automotive <0175.HK>, the Chinese carmaker whose parent is eyeing Ford's Volvo unit, is set to raise capital through a bond issue in a move that may provide funding for a Volvo bid.

Analysts, however, said the bonds could also be used for Geely to expand its car making capacity rather than to launch an immediate bid for Ford's $2 billion plus Swedish car unit.

Geely said last week its parent was considering a bid for Volvo with a local government-backed investment firm.

A successful deal would boost the profile of Geely, a small, homegrown car maker and give it access to Volvo technology it needs to upgrade its cars.

Yet some analysts have raised concerns about whether the Chinese car maker will be able to make the acquisition work.

The move is a bit of a surprise to the market, said Vivien Chan, analyst at Sinopac Securities Corp. We had a meeting with the company before and they did not mention any funding needs.

In March, Geely bought Australian automatic transmission supplier Drivetrain System International for $40 million, but a company executive said that deal was paid for from proceeds of a share placement in May.

A spokesman for the listed company in Hong Kong said the suspension of trading in Geely shares on Wednesday was related to a major transaction. He would not clarify further.

The Hong Kong exchange said the Geely suspension was pending an announcement related to a proposed issue of convertible bonds and warrants. No financial details were immediately available.

Geely shares have dropped more than 18 percent since hitting a life high early last week.

Geely, valued at around $1.68 billion, is working with British partner Manganese Bronze Holdings Plc to make and sell London's iconic black cabs in China. (Reporting by Alison Leung and Michael Flaherty; Writing by Ian Geoghegan; Editing by Jean Yoon)