Mercedes-Benz has taken a groundbreaking step by becoming the first foreign automaker to issue a Green Asset-Backed Security (ABS) in China, offering an annual coupon of 1.87% and achieving an oversubscription ratio of three times. This initiative is part of Mercedes-Benz’s broader strategy to expand its footprint in sustainable finance, in line with its Ambition 2039 plan. The proceeds from this Green ABS will be dedicated to financing new retail loans for Battery Electric Vehicles (BEVs) in China, reinforcing the company’s commitment to green transformation.
In July 2024, Mercedes-Benz Auto Finance Ltd. (MBAFC), a division of the Mercedes-Benz Mobility group, successfully launched its first Green Auto Loan ABS in the Chinese Interbank Bond Market. The Class A Notes amounted to RMB765 million (€100 million), with a weighted average life of 1.42 years and an annual coupon rate of 1.87%.
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The issuance saw significant interest, being oversubscribed three times. The transaction was facilitated by China Merchants Securities, BNP Paribas (China) Limited, Bank of China, and Standard Chartered Bank (China) Limited. This marks Mercedes-Benz’s debut Green ABS worldwide, highlighting its pioneering role as the first foreign automotive company to issue such a security in China.
Steffen Hoffmann, Head of Treasury and Investor Relations at Mercedes-Benz Group AG, emphasized the company’s dedication to its green finance strategy, stating, “In line with our Ambition 2039, we continue to expand our green finance strategy. With this Green ABS, we are offering investors in the Chinese capital market another green financial investment. In 2022 and 2023, we had already successfully issued Green Panda Bonds.”
The Green Auto Loan ABS aligns with China’s domestic Green Bond standards for finance companies, reflecting a double-green approach. The underlying collateral comprises auto loans for BEVs, with the proceeds earmarked for funding new BEV loan contracts with MBAFC customers in the near future.
Franz Reiner, CEO of Mercedes-Benz Mobility, highlighted the role of the company’s product range in promoting electric vehicles, stating, “With our product range we offer customers a comfortable entry into the electric era. The securitization of our customer receivables for electric vehicles demonstrates how much our financing products already support the sales of Mercedes-Benz electric vehicles.”
Mercedes-Benz’s ABS activities in China have been robust since March 2016, with MBAFC issuing 17 transactions under its Silver Arrow China Loan (SACL) platform, totaling approximately RMB114 billion (€14 billion). Acting as both originator and servicer, MBAFC ensures the ABS notes are backed by a pool of high-quality auto loans, maintaining strong investor confidence in their financial products.
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