NIO's finance and leasing subsidiary marked the EV maker's debut in the Chinese capital market with a successful RMB 1.03 billion ABS issuance on the Shanghai Stock Exchange.
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Although NIO is not listed on China's A-share market, this latest move allows it to successfully obtain low-cost financing from its home market.
NIO's subsidiary, NIO Financial Leasing Co Ltd today successfully issued a new energy vehicle leasing ABS (Asset-backed securities) on the Shanghai Stock Exchange, marking the EV maker's debut in the Chinese capital market.
This is also the first ABS for carbon-neutral projects in China, with a total size of RMB 1.03 billion ($161 million) and a maturity date of 2023.
The RMB 812 million senior A tranche of ABS has a debt rating of AAA and a coupon rate of 3.64 percent. The RMB 48 million senior B tranche of ABS has a debt rating of AA+ and a coupon rate of 4.20 percent.
For ABS issuers, lower interest rates mean lower costs.
As a comparison, commercial vehicle smart finance and service platform Lionbridge Financing Leasing issued an ABS senior A1 tranche with a coupon rate of 3.95 percent on October 19, the first time its ABS issuance rate was below 4 percent.
Lionbridge's ABS senior A2 coupon was 4.5 percent at the time.
In addition, NIO ABS' 3.64 percent rate was below the latest 3.85 percent level of the China benchmark 1-year loan prime rate (LPR).
The successful issuance marks NIO Finance Leasing's debut in the Chinese capital market, reflecting the local capital market's high recognition of NIO and the quality of its leasing assets, said Stanley Qu, NIO's vice president of finance, adding that NIO has further broadened its low-cost financing channels.
The funds raised need to continue to be used for the new energy vehicle leasing business, Qu said.
NIO Finance Leasing was established on August 15, 2018, with Qu as chairman.
While NIO is not listed on A-share market and its Hong Kong listing still seems a long way off, the ABS offering goes some way to making up for those shortcomings.
Earlier this year, NIO's local counterparts XPeng Motors and Li Auto received HK$14 billion ($1.8 billion) and HK$11.8 billion ($1.5 billion), respectively, through their Hong Kong listings.
NIO's latest ABS offering is about one-tenth of the amount raised by XPeng or Li Auto in Hong Kong.