Bond, loan borrowings by Chinese auto/autoparts makers rise in 2021 in tandem with increase in unit sales

Data InsightDebtDynamics 21 March

Bond, loan borrowings by Chinese auto/autoparts makers rise in 2021 in tandem with increase in unit sales

The volume of borrowings by Chinese auto and auto-parts makers via bonds as well as syndicated and club loans increased in 2021 after declining for two consecutive years, in tandem with an increase in automobile unit sales.

Borrowings in the sector rose 5.3% YoY to USD 19.32bn-equivalent in 2021 from USD 18.35bn in 2020. The amount declined for two consecutive years after the USD 22.73bn recorded in 2018. Likewise, China’s annual auto sales grew last year for the first time since 2017 with 26.28m million vehicles sold in 2021, up 3.7% from 25.31 million in the previous year, data from the China Association of Automobile Manufactures (CAAM) show.

China’s largest state-owned automaker SAIC Motor Corp raised the biggest amount of debt among the Chinese automotive companies in 2021 with USD 4.86bn-equivalent, boosted by a CNY 26bn (USD 4.01bn) three- and ten-year syndicated loan signed in May. Another state-owned company Dongfeng Motor Corp and privately held Zhejiang Geely Holding Group Co Ltd came a distant second and third with total borrowings of USD 1.61bn and USD 1.39bn, respectively. Geely is currently in the market with a EUR 2.7bn (USD 3bn) three-year loan to refinance an existing loan that backed its purchase of a stake in Swedish trackmaker AB Volvo in 2018.

SAIC Motor sold a total of 5.46 million vehicles in 2021, while Dongfeng Motor sold 2.77 million units and Geely Automobile sold 1.33 million, according to separate company disclosures.

Amid the economic sanctions imposed on Russia following its invasion of Ukraine, several foreign car companies have either halted exports into the country or suspended local production. Chinese automakers which have operations in Russia haven’t so far made any public disclosures about their plans.

Great Wall Motors’ Haval, Chery and Geely were the top Chinese car brands sold in Russia in February 2022, according to statistics published by the Association of European Businesses (AEB). Their respective unit sales grew 65%, 45% and 82% YoY during the month.

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