On October 18, 2013, Toyota Financial tendered to issue 1.3 billion yuan of 3-year financial bonds to supplement the company's working capital and optimize its asset and liability structure. The interest rate for the period is fixed-rate bonds with a coupon rate of 5.6%. Founded in 2005, Toyota Finance is a wholly-owned subsidiary of Toyota Financial Services. This is the first financial bond issued by a foreign-funded financial company in China. At the same time, this is the second issue issued by the auto finance company since the issuance of financial bonds by SAIC General Motors Finance Co., Ltd. (hereinafter referred to as “SAIC General Motorsâ€). Financial bonds. Health Pharmaceutical Products Health Pharmaceutical Products,Pharmaceutical Health Product Cas 8049-47-6,Health Products,Health Care Products Jinan Meiluwei Biotechnology Co.,Ltd. , https://www.mlwpharma.com
China's automobile consumer credit has experienced a development stage from barbaric growth to rational and orderly development. From 2001 to 2003, China's automobile consumer loans experienced a period of rapid expansion. However, due to the relatively extensive operation, risk control was not in place, and non-performing loans increased significantly in the following years. According to central bank data, as of the end of 2005 and the end of September 2006, the non-performing loan ratio of personal auto consumption loans reached 8.98% and 12.86%, respectively. After the Central Bank and the China Banking Regulatory Commission announced the "Automobile Loan Management Measures" in August 2004, commercial banks were more cautious about the business expansion of auto consumption loans, and their business growth rate also dropped sharply. At the same time, after the China Banking Regulatory Commission promulgated the "Administrative Measures for Auto Finance Companies", auto finance companies have gradually become important participants in the domestic auto finance industry. With its information superiority gained by relying on car companies, the auto finance company draws on the parent company's advanced risk management concept and perfect risk management system. While achieving rapid development, it also maintains a good asset quality.
As of the end of October 2012, the total assets of 16 auto financing companies approved to open have reached 170 billion yuan, and industry loans amounted to 167.2 billion yuan. According to statistics from the central bank, the growth rate of auto finance in 2012 exceeded 30%, and the total market reached 392 billion yuan. At the same time of high growth, auto credit also maintained good asset quality. At the end of October 2012, the industry's NPL ratio was only 0.7%, which was at a low level. From the market of developed countries, the penetration rate of automobile credit consumption generally exceeds 60%, while the domestic figure is only 15%, and the space for auto finance business is huge.
However, while the industry is rapidly developing, the operating model with bank borrowing as the main financing channel also limits the development of the industry to a certain extent. As an auto finance company with a credit business as its main business, capital is the lifeblood of the company's operation and development. From the current status of the industry, auto finance companies need to get rid of the tights of financing. China's auto finance company financing mainly relies on shareholders' capital increase, shareholder deposits, bank loans, peer lending and bond issuance. Among them, shareholders' capital increase is operational, but it is limited by shareholders' capital strength and development strategy; auto finance companies can only accept shareholder units. More than a month of deposits; interbank borrowing mainly solves short-term funding problems and is difficult to operate for a long time; bank lending is the main channel for financing, but the disadvantages are more obvious, not only the cost of capital is high, but also the auto finance company is greatly affected by the credit strategy of commercial banks. When banks are in a tight liquidity, auto finance companies are harder to obtain credit. In a hurry, some auto finance companies began to seek overseas financing channels, such as Shenlong Auto Finance Co., Dongfeng Peugeot Citroen Financial Company, and Ruifu Auto Finance Company, all of which reached a cooperation agreement with overseas banks. The high cost of capital makes the cost of auto finance companies high, which greatly affects the competitiveness of the latter. In contrast, issuing bonds is an ideal way, but the amount of actual debt issued by auto finance companies is extremely small. As of 2012, only SAIC has issued two single credit asset-backed securities in 2007 and 2012, and issued a single financial bond in 2010; Shanghai Automotive Group Finance Co., Ltd. issued a single credit asset-backed securities in 2012. No other auto finance company issued a bond.
From the point of view, the approval of the Toyota Bond is not unrelated to the current domestic financial reform. Since the State Council issued 10 opinions on financial reform in July 2013, reforms in the domestic financial sector have taken off, and substantial progress has been made in interest rate liberalization and asset securitization. Whether the central bank cancels the loan interest rate lower limit, expands the asset securitization pilot, or the CBRC modifies the commercial bank liquidity management measures and increases the consumer credit pilot cities, these measures reflect the current regulatory commitment to reform and promote development. In addition, the approval of Toyota Financial Bonds is also a manifestation of China’s commitment to the fourth round of China-US Strategic and Economic Dialogue.
The re-launch of the issuance of auto finance bonds is a big plus for both auto finance companies and the auto industry.
(1) Further broaden the financing channels and enhance the momentum of business development. Nearly 60% of the funds of foreign auto finance companies come from absorbed deposits and issued bonds. According to the “Administrative Measures for Auto Finance Companiesâ€, domestic peers cannot absorb deposits externally. Financing relies mainly on bank loans and interbank lending, and issuing financial bonds. Very few. The issuance of the Toyota Bond means that after three years, the issuance of auto finance bonds will start again, which will undoubtedly further expand the financing channels of auto finance companies, ease the funding bottleneck of business development, and increase the momentum for business expansion.
(2) Long-term positive development of the automotive industry. The automobile industry is an important industry related to the national economy and the people's livelihood. From the international experience, auto finance has become the largest link in the capital and profit rate of the automobile industry chain. The contribution rate of auto finance companies to the whole vehicle enterprise has entered 30%-50 The high level of %, while the profitability of domestic auto finance companies is weak. The resumption of auto financial bond issuance is conducive to the long-term development of the auto industry, especially after the profit of the automobile manufacturing sector is thinning, which is conducive to the transfer of profits to auto finance and other aspects, and optimize the profit model of auto companies.
From the interest rate of the current bond, the issue rate of 5.6% is relatively high. Analysts believe that this aspect may be affected by the current tight market liquidity. On the other hand, even if the interest rate is relatively high, it is difficult to prevent auto financing companies from issuing debts. First, the funds obtained from bond financing are more stable, and the cost of issuing bonds is not at a disadvantage relative to bank loans. Take Toyota Finance as an example. In 2012, its interest expense/average interest-bearing liability was 6.1%, a year-on-year increase of 0.48 percentage points, higher than the bond issuance rate. Second, auto finance companies have strong pricing power and can make up for their high debt costs. Take Toyota Finance as an example, its net interest margin in 2012 was as high as 5.74%, which was 4.59% higher than that in 2011, which was significantly higher than the net interest margin of 2%-3% of domestic banks, indicating the company's strong pricing power. . Finally, judging from the positioning of the auto finance company, it is also responsible for the promotion of the parent company's car sales while making profits, and even the latter target is more important. Therefore, auto finance companies still have a strong incentive to obtain funds to expand their business.