In our view, LGFV credit quality is set to see further differentiation in 2023, due to changes in the financing environment, regional land markets and debt maturity pressure. Weak LGFVs will come under growing liquidity pressure, as credit events such as non-standard debt defaults and bank loan restructures increase.

Against this backdrop,  we assessed the banking sector’s exposure to weak LGFVs, and potential impact on capital. We don’t see LGFV risks posing a significant threat to banks’ overall capital adequacy, with capital pressure largely concentrated among certain city banks.

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BEIJING, March 13, 2024- S&P Global (China) Ratings has assigned its rating AAA_spc(sf) to Silver Arrow China 2024-1 Retail Auto Loan Asset Backed Notes (SAC 2024-1) senior notes of Class A (Class A). The transaction was originated by Mercedes-Benz Auto Finance Ltd.

List of Ratings:

Class A Note: AAA_spc(sf)

Methodology Applied:

• S&P Ratings China--Structured Finance Methodology

Related Research:

• Commentary: Understanding Our Approach to China Consumer Asset-Backed Securities
• China’s Auto ABS Sector Deep Dive: 2024 Edition

Models Applied:

• SPG China Ratings Structured Finance Cash Flow Engine

Media Contacts:

Sharon Tang, Beijing, (86)10-6569-2988; sharon.tang@spgchinaratings.cn

Analyst Contacts:

Enjie Zhang, Beijing; enjie.zhang@spgchinaratings.cn

Kaiyan Li, Beijing; kaye.li@spgchinaratings.cn

Jiarong Li, Beijing; jiarong.li@spgchinaratings.cn

On March 13, 2024, S&P Global (China) Ratings published its latest surveillance rating report on ICBC Financial Leasing Co., Ltd. Please click the link below to read in PDF.