Volkswagen plans to sell asset-backed securities in China

Article by Christian A., 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

Recommended

J.D. Power has officially released the 2017 Vehicle Dependability Study, an annual list of the most dependable brands in the auto industry. Once again coming on top is Lexus, the...
by - February 26, 2017
Citroen revealed that its entry to the Chinese market is moving forward with the planned release of the new generation C5. While still on sale on this part of the...
by - February 26, 2017
There is definitely a second-generation Super Series from McLaren. Even in camouflaged form, it is simply incredible. But while we still don’t have the full data on how truly dynamic...
by - February 25, 2017
A lot of fans are excited with the news that Porsche could be unveiling a performance version of its Panamera 4 E-Hybrid plug-in hybrid during the 2017 Geneva Auto Show. ...
by - February 25, 2017
Tesla is finally setting a more “definite” schedule with regards to the official launch of the Tesla Model 3 electric car. A “limited production” is said to be slated to...
by - February 25, 2017
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