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Treasury & Capital Markets
Mercedes-Benz issues first green ABS in China
Issuance, backed by battery electric vehicle loans, oversubscribed three times
Tom King 9 Jul 2024

German automotive giant Mercedes-Benz has issued its first green auto loan asset-backed security (ABS) in China’s Interbank Bond Market, raising 765 million yuan (€100 million or US$108.24 million).

Mercedes-Benz Auto Finance Ltd. (MBAFC), part of the Mercedes-Benz Mobility group division, issued the Class A notes with a weighted average life of 1.42 years and a coupon rate of 1.87%.

Proceeds from the ABS, which was oversubscribed 3x, will be used to finance the new retail loan business of Mercedes’ battery electric vehicles (BEVs) in China.

The issuance was arranged by China Merchants Securities, BNP Paribas (China), Bank of China, and Standard Chartered Bank (China). It is Mercedes’ first green ABS worldwide, and makes it the first foreign automotive company to issue a green ABS in China.

"In line with our Ambition 2039, we continue to expand our green finance strategy,” says Steffen Hoffmann, head of treasury and investor relations at Mercedes-Benz Group.

“With this Green ABS, we are offering investors in the Chinese capital market another green financial investment,” Hoffmann says, noting that the company had issued green panda bonds in 2022 and 2023.

The issuance is in line with the double-green approach of China’s domestic green bond standards for finance companies. The collateral pool consists of auto loans for BEVs and the proceeds will be used to fund new auto loan contracts for BEVs with MBAFC customers in the coming months.

Since March 2016, MBAFC has issued under its Silver Arrow China Loan (SACL) platform 17 transactions totalling 114 billion yuan. Acting as both the originator and servicer, MBAFC ensures that the ABS notes are backed by a pool of high-quality auto loans.

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