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:

Pin It

Comments

Recommended

It’s quite safe to say that this generation marks the rise of the electric cars. For the past few years, automakers have been very busy trying to find the perfect...
by - March 28, 2017
Want to go for a sportier look, but don’t have enough cash to burn? Good news for future Ford Edge buyers, as the 2018 model year will have an optional...
by - March 28, 2017
Audi refreshes its portfolio as its go-faster division officially announces the release of six new RS models by the end of 2018. That’s quite a huge number of cars to...
by - March 28, 2017
Has Toyota started the production of a new electric supercharger? Well, a patent that was recently published indicated that they might have. And this electric supercharger looks more durable and...
by - March 27, 2017
The Tesla Model S has finally arrived in South Korean soil and is now available for test drive. But, there’s a catch. You’ll have to wait several months if you...
by - March 27, 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