VW plans asset-backed bonds
Source: Bloomberg News |
June 17, 2011, Friday
|
Print Edition
Print Edition
VOLKSWAGEN AG plans to sell asset-backed securities in China when government rules allow issuance of the debt amid soaring vehicle sales in the country.
"We are getting ready, it's an internal project at the moment," said Stefan Rolf, head of securitization at Volkswagen Financial Services AG, the car maker's financing unit. The Germany-based company may be ready to issue car loan-backed bonds in China by the end of 2012, if legislation is ready, he said.
Asset securitization is favored by People's Bank of China officials, including Vice Governor Liu Shiyu, who said it can help banks manage balance sheets and will ensure China's markets keep pace with its economic development. Volkswagen is planning the securities as its vehicle sales in China jumped 20 percent in the first quarter, outpacing industry growth of 8.1 percent, the auto maker said in April.
Banks create asset-backed securities by pooling loans into notes that are sold to investors, allowing lenders to raise capital more cheaply than by issuing unsecured debt. Sales of the bonds in Europe evaporated in 2008 as losses from subprime mortgage bonds in the US caused investors to shun hard-to-value assets. Offerings have picked up since 2009.
Some Chinese banks already arrange informal securitizations, according to Fitch Ratings.
"We are getting ready, it's an internal project at the moment," said Stefan Rolf, head of securitization at Volkswagen Financial Services AG, the car maker's financing unit. The Germany-based company may be ready to issue car loan-backed bonds in China by the end of 2012, if legislation is ready, he said.
Asset securitization is favored by People's Bank of China officials, including Vice Governor Liu Shiyu, who said it can help banks manage balance sheets and will ensure China's markets keep pace with its economic development. Volkswagen is planning the securities as its vehicle sales in China jumped 20 percent in the first quarter, outpacing industry growth of 8.1 percent, the auto maker said in April.
Banks create asset-backed securities by pooling loans into notes that are sold to investors, allowing lenders to raise capital more cheaply than by issuing unsecured debt. Sales of the bonds in Europe evaporated in 2008 as losses from subprime mortgage bonds in the US caused investors to shun hard-to-value assets. Offerings have picked up since 2009.
Some Chinese banks already arrange informal securitizations, according to Fitch Ratings.
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