China's Largest Automaker Announces Billion Dollar Bond Offering
The International Herald Tribune reports that Shanghai Automotive is selling $1.06b worth of junk bonds to fund its expansion plans. China's largest automaker says it needs the cash to develop its own-brand Roewe sedans, repay debt and expand commercial-vehicle production. Details of the offering are sketchy at best; Shanghai didn't reveal the sale date, how many call warrants investors would receive or the trigger price. Oh, and Shanghai's debt has not yet been assessed by any of the three largest global credit rating companies. Still, if you have faith in the Chinese auto market– which just passed Japan to become the world's number two (after the U.S.)– it could be a good deal. Thanks to laws requiring foreign automakers to partner with domestic producers, Shanghai has its fingers in a lot of pies: General Motors (Shaghai GM, SAIC-GM-Wuling Automobile), Volkswagen (Shanghai Volkswagen Automotive) and Ssang Yong Motor Company. On the downside, the emphasis on the new Rover-based Roewe 750 sedan may not pan out. Shanghai says it sold a little over 1000 750s per month in its first four months of production.