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Peugeot Sells More than $620M of Bonds for Auto Financing

Banque PSA Finance (BPF), the banking arm of PSA Peugeot Citroen, sold asset-backed securities for about 470 million euros, or more than $620 million, to boost finances for auto loans as it waits for the European Union’s decision on government bond guarantees.

Bloomberg reports that the sale of securities backed by French auto loans is part of BPF’s “strategy to diversify its funding sources and to increase the share of funding from its securitization program” to back the carmaker’s sales.

Peugeot, the second largest auto maker in Europe, secured financial support from the French government so BPF can sell up to 7 billion euros of bonds to help it produce competitive auto loan deals to prop sales. BPF sold 1.2 billion euros of bonds in the first tranche in March with temporary approval from the EU.

An EU antitrust watchdog is running a thorough examination on Peugeot to see whether the carmaker’s restructuring plans are in accordance with the state-aid rules, Bloomberg reports.

The EU commission said early last month that they need to check whether the plan will recover the company’s sustainable financial capability without the state’s help and whether the support will affect the competition.

Two months ago, Moody’s Investors Service lowered BPF’s credit rating to one level from investment grade. The credit ratings firm said that the automotive market contraction that has been affecting Peugeot is inevitable for the financing unit.




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