UPDATE:Auto-Loan Backed $1.13 Billion Non-TALF Eligible Deal Launched
15 April 2009 - 8:36PM
Dow Jones News
An auto loan-backed deal that was increased in size to $1.125
billion has launched, according to a person familiar with the
deal.
The bond, USAOT 09-1, issued by USAA, a financial-services
company, isn't eligible for funding under the Federal Reserve's
Term Asset-Backed Securities Loan Facility, or TALF.
Issuance of non-TALF eligible deals has been growing in the past
few weeks, signaling investors are willing to return to this part
of the credit market after a hiatus created by the credit crunch.
More than $9 billion in deals backed by auto, student and equipment
loans have emerged since the beginning of this year, according to
Informa Global Markets, an information provider for these
bonds.
So far, this is less than the $12 billion in issuance of bonds
that investors could buy using loans from the central bank's TALF
program. That program has had several operational hiccups as
investors have balked at lengthy documentation and possible
legislative interference. That said, market participants expect an
uptick in issuance, both TALF and non-TALF eligible.
Initially, the USAOT deal was $946 million in size, but demand
was "so strong" that the size was increased, according to one
investor.
The largest triple-A rated tranche worth $587 million has
launched at 165 basis points over swaps.
Price guidance on this tranche was in the 300 basis points over
swaps area Tuesday.
The deal is expected to price later Wednesday.
Joint leads are Banc of America Securities and JP Morgan.
-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371;
anusha.shrivastava@dowjones.com