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