Auto industry firms raise $155 billion to weather virus pandemic | Auto Finance News

Automotive industry borrowers have raised $155 billion amid the coronavirus outbreak as the pandemic shutters showrooms and factories.

Companies worldwide have been drawing down on existing credit lines and seeking new credit deals to weather the health crisis as it hits demand for vehicles.

The $155 billion gathered in less than three months since mid-March is equivalent to the issuance in the eight-month period before global cities went into lockdown.

The $44 billion of bonds sold in the period is greater than the industry’s issuance in any single quarter. The $111 billion of loans raised in the period could match the sales of $133 billion seen in 2019 once about $18 billion of pending deals get completed.

Read More: Fast and Furious Debt Pile-Up Threatens U.K.’s Luxury Carmakers

General Motors Co., the industry’s biggest borrower, raised $21.6 billion of loans and sold $5.5 billion of bonds. GM, which had drawn down on a $16 billion revolving facility in March, subsequently added two more new loans.

GM tapped capital markets again this month. Automakers including Ferrari NV and Toyota Motor Corp. followed suit as some industry output resumed and countries began to lift restrictions on travel.

REGIONAL DEBT

Loan drawdown

($ B)

New loan

($ B)

Loan pipeline

($ B)

Bond

($ B)

Americas 42.1 7.97 0 16.1
Europe 9.7 37.45 7.46 19.12
Asia 0 13.49 10.3 9.44
Total 51.8 58.91 17.76 44.66

AMERICAS:

  • Companies in the Americas raised $50 billion of loans, the bulk of which came from drawdowns. They also sold $16 billion of bonds.
  • Besides major carmakers, auto parts suppliers such as Tenneco Inc. or parts retailers including AutoZone Inc., have also tapped the loan market.
    • A total of 33 borrowers raised loans, with some such as AutoCanada Inc. asking to loosen covenants for more financial flexibility.
  • Ford Motor Co. tapped both the loan and bond markets. Goodyear Tire & Rubber Co. is the latest to issue bonds.
  • Click here for Americas worksheet with list of drawdowns, new loans and covenant revisions

EUROPE:

  • European auto sector companies have raised $47 billion of loans and $19 billion of bonds
    • At least another $7 billion of loans is in the pipeline.
  • Daimler AG is so far the biggest borrower from the region with a 12 billion-euro ($13 billion) credit line and a 3 billion-euro bond.
  • Renault SA took out a 5 billion-euro loan with a government guarantee. Fiat Chrysler Automobiles NV is negotiating a similar deal with Italy.
  • More than 20 companies including suppliers such as ZF Friedrichshafen AG and rental firms such as Sixt SE have tapped the loan market.
  • Volkswagen AG and Daimler AG are among six European issuers that have sold $19 billion of bonds since March.
  • Click here for EMEA worksheet with list of drawdowns, new loans and covenant revisions

ASIA:

  • The Asian auto industry has raised $13 billion of loans and $9.4 billion in bonds since March
    • Another $10 billion is still in the loan pipeline.
  • Six of Japan’s 10 auto giants have tapped the debt market including Toyota Motor Corp. and Subaru Corp.
  • Toyota is the only one to raise funds from both the loan and bond markets. Hyundai Motor Co. is the only non-Japanese auto sector firm from the region to have tapped capital markets since March.

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