Volkswagen plans to sell asset-backed securities in China

Article by Christian Andrei, on June 17, 2011

As auto sales in China surge, Volkswagen AG intends to sell asset-backed securities in the country when government rules allows the issuance of the debt, according to Stefan Rolf, who heads securitization at Volkswagen Financial Services AG (VW's financing unit). He said that VW is preparing for the internal project.

He added that the company will be issuing car loan-backed bonds in the country by the end of 2012 if government legislation is ready.

Asset securitization is favored by People's Bank of China officials such as Deputy Governor Liu Shiyu, who stated that it can help banks manage balance sheets and will ensure China's markets keep pace with its economic development.

The company is planning the securities as its vehicle sales in the country increased 20 percent in the first quarter, outpacing industry growth of 8.1 percent, the company stated in April. Banks make asset-backed securities by pooling loans into notes that are sold to investors.

This will allow lenders to increase capital more cheaply than by issuing unsecured debt. The sales of the bonds in Europe evaporated in 2008 when losses from subprime mortgage bonds in the U.S. pushed investors to avoid hard-to-value assets. Offerings have caught up since 2009.

There are no set rules for asset-backed debt in China, although some of the country’s lenders arrange private transaction that are known as informal securitizations to lessen the loan on their balance sheets, according to Fitch Ratings.

Volkswagen is also working on securitizations in France and Australia that may be ready within the next couple of years, Rolf said. Issuing local currency deals is also planned for Japan and Brazil.

Topics: vw, china

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

After we caught a glimpse of the revamped Amarok, VW Australia once again wants to give its ute a sinister look inspired by the Mad Max movie franchise. The “Korama”...
by - December 7, 2016
Customers in the European market are known for leaning towards style and with this in mind, Nissan has revealed the special LEAF Black Edition. While the production run of this...
by - December 7, 2016
When Volkswagen unveiled the VW Atlas, it declared that this SUV is being developed for the United States and is set to arrive as a 2018 model. It also unveiled...
by - December 7, 2016
Did you miss the opportunity to get a brand new Dodge Viper? Well, here’s something you don’t want to miss. Dodge has announced a “final call” for orders for its...
by - December 6, 2016
Acura fans and customers rejoice! Sales have begun for the flagship model of Acura’s RLX top-of-the-range sedan – the 2017 Acura RLX Sport Hybrid. Described by Acura as its most...
by - December 6, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries