Recent strong growth in the country’s new energy vehicle (NEV) industry, driven by targets for electric vehicles to comprise 40% of car sales by 2030, and the commitments made by China at the UN General Assembly – to actively and steadily strive to achieve peak carbon dioxide emissions before 2030 and carbon neutrality before 2060 – has accelerated the demand for green securitisation vehicles among China’s original equipment manufacturers (OEMs).
Aligning with its strategic goals of supporting the green development and harnessing the quickening industry momentum, Chinese auto financial services provider Genius Auto Finance Co., Ltd. – a joint venture between Geely Automobile Holdings (80%) and BNP Paribas Personal Finance (20%) – has issued its first green asset-backed auto loan security (ABS). The landmark deal was Genius Auto Finance’s fourth securitisation transaction in 2022 and marks BNP Paribas’ first green Chinese asset-backed security as joint lead underwriter.
Genius AFCs first green auto ABS
Genius Auto Finance Co., Ltd. (“Genius AFC”) successfully issued a RMB1,200 billion “Generation 2022-4 Personal Auto Mortgage Loan Green Asset-backed Securities” in the onshore interbank bond market. The parties involved were Genius AFC as the originator, Shanghai Trust as the trustee and issuer, Guotai Junan Securities as the Lead Underwriter and bookrunner, and Bank of China, BNP Paribas and Sumitomo Mitsui Banking Corporation as the Joint Lead Underwriters.
The issuance was backed by an underlying pool of green assets comprising new energy vehicle loans from Geely, Lynk & Co, Volvo, Zeekr and Geometry. According to the analysis of Lianhe Equator, a green certification and evaluation agency, the underlying assets of this green ABS are expected to achieve over 30,000 tons of carbon dioxide emissions reductions and over 14,000 tons of standard coal saving per year, which has significant energy-saving and emission reduction benefits.
Green ABS create new financing opportunities for auto finance companies – reducing their capital costs, while at the same time giving them the opportunity to offer financial services solutions that promote a low-carbon economy.CG Lai, CEO China, BNP Paribas
“In line with the rapid development of China’s electric vehicle industry, green ABS that have green auto loans as base assets, are becoming more prominent,” says CG Lai, CEO China, BNP Paribas. “Green ABS create new financing opportunities for auto finance companies – reducing their capital costs, while at the same time giving them the opportunity to offer financial services solutions that promote a low-carbon economy.”
As the transition to a sustainable low-carbon economy gathers pace, innovations in green finance will play a crucial role in supporting sustainable development in both the automotive industry and beyond. At the forefront of the development of the Chinese asset securitisation market, BNP Paribas ranks among the leading banks in China’s interbank ABS market for auto loans, winning “Best Bank for ABS” in the 2021 annual Global Capital China awards.
BNP Paribas has been joint lead underwriter for nine of these deals, making us a leader in the securitisation of Chinese auto loans.George Sun, Head of Global Markets, Greater China, BNP Paribas
“This issuance was Genius AFC’s fourth auto loan securitisation in 2022, as well its 17th securitisation since it first entered the capital markets in 2018,” says George Sun, Head of Global Markets, Greater China, BNP Paribas. “BNP Paribas has been joint lead underwriter for nine of these deals, making us a leader in the securitisation of Chinese auto loans.”
An asset-backed security (ABS) is a marketable security of cash-generating assets. The essential difference between green ABS and standard ABS lies in the underlying assets, the use of proceeds and/or the original stakeholder’s industry. In the case of the green ABS issued by Genius AFC, the underlying assets are green, new energy auto loans with clear and quantifiable environmental benefits. To be certified as green, these securities must comply with national and/or international standards. The green ABS issued by Genius AFC was certified by Lianhe Equator.