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Automakers take to Chinese debt markets

  • Toyota (TM) and Ford (F) plan to sell asset-backed securities in China. Each have about 800M yuan set to go to auction later this month.
  • The automakers will securitize their car loans in an effort to free up more funds for investment.
Comments (4)
  • Tdot
    , contributor
    Comments (4048) | Send Message
     
    Hmm. OK "asset-backed securities" - just another name for secured debt (backed by car loan receivable assets in this case), and at 16 cents per, that ¥800M is just under $130M.

     

    The bottom line is Ford is selling debt in China to increase cash to help pay for the growth there.
    16 May, 01:16 PM Reply Like
  • Ford Man 26
    , contributor
    Comments (57) | Send Message
     
    I don't think the point here is that Ford is borrowing money to finance growth. I think they are borrowing money to sell cars to people in China on credit - something very new in a market where most buyers show up at the dealership with a suitcase full of cash. This could open up the customer base to a lot more people - and start the Chinese down the same debt laden, consumption driven rate hole that most of the West has gone down.
    16 May, 02:04 PM Reply Like
  • Tdot
    , contributor
    Comments (4048) | Send Message
     
    From the article ...

     

    "Ford Automotive Finance (China) Ltd. will sell nearly 800 million yuan ($128 million) worth of asset-backed securities in China on May 22, while Toyota Motor Finance (China) Co. will auction close to 800 million yuan worth of asset-backed securities. Securitizing Loans Will Help the Auto-Financing Companies to Take the Loans Off Their Balance Sheets and Free Funds".

     

    So standing corrected, Ford's Chinese credit subsidiary is selling off existing car loans, to raise money to invest in financing more auto sales.
    16 May, 06:35 PM Reply Like
  • Lexicfo
    , contributor
    Comments (7) | Send Message
     
    This is just another example of Ford as a well managed company. Ford's Treasury function is matching assets with liabilities denominated in Yuan as they grow in China. The two primary takeaways are that they ARE growing in China and they know how to manage their balance sheet (but we all know that as they didn't need a bail out).
    16 May, 02:42 PM Reply Like
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