Chinese car rental giant CAR Inc issued US$300 million in bonds on August 3, its second batch this year after issuing US$500 million five-year dollar-denominated bonds in January.
CAR Inc has mega-star David Becham to endorse its chauffeur brand
Its latest bonds have a longer time period, carry an annual interest rate of 6%, vis-a-vis 6.125% of its January lot, and are nine times oversubscribed at its final price. The last lot was oversubscribed by over US$7 billion.
CAR Inc said it would use the capital raised in the two bond issues for capital expenditure and other corporate expenses including refinancing its existing debts and enhancing its capital structure.
However, one industry observer speculates that Car Inc’s successful issue of US$800 million in bonds this year is closely connected with capital investment in its chauffeur service operations. He pointed out that Car Inc announced the launch of its UCAR chauffeur service in 60 major Chinese cities on January 28, one day before its bond issue that month, and it teamed up with Legend Holdings and Warburg Pincus to jointly invest US$250 million in UCAR on July 1 before this latest bond issue.
The three top global financial rating institutions Moody’s, S&P and Fitch individually gave “(P)Ba1” and “BB+” ratings to CAR Inc after its latest bond issue and maintained a stable outlook for the car rental company. In their reviews, the three rating institutions specifically pointed to the stable growth of CAR Inc’s car rental operations, increasing revenue and the remarkable development of its UCAR brand as driving its development.
CAR Inc continued to gain earnings from its car rental operations and chauffeur service and expanded its motor pool to 72,994 vehicles in the first quarter of 2015. It added 10,000 more vehicles since the end of last year, giving it a far larger motor pool than its competitors, according to company data.
UCAR already overtook Yongche and Didi’s No1 Chauffer Service by May this year and now holds 16.5% of the market while Uber has a 86.2% market share, according to statistics by Analysis.(Translation by David)
