Volkswagen Offers $1 Billion TALF-Eligible Deal
30 April 2009 - 6:01PM
Dow Jones News
Volkswagen AG (VLKAY) is in the market with a $1 billion deal
that is eligible for funding under a Federal Reserve program.
The deal, called Vwalt-09, is scheduled to be sold on May 5, the
loan application deadline for the Term Asset-Backed Securities Loan
Facility, or TALF.
Joint leads for the deal are JPMorgan Chase & Co. (JPM) and
Bank of America Corp. (BAC).
Honda Motor Co. (HMC) and CNH Global NV (CNH) are also shopping
TALF-eligible deals.
Honda has a $1.25-billion asset-backed securities deal dubbed
Harot 09-2. It is backed by auto loans and is expected to be sold
on May 5.
On the largest triple-A rated tranche of $456 million, guidance
is in the range of 150 basis points to 155 basis points over a
short-term futures benchmark.
The deal is led jointly by JPMorgan and BNP Paribas SA (BNPQY).
Co-managers are Barclays PLC (BCS), Credit Suisse Group (CS), HSBC
Holdings PLC (HBC), Mitsubishi and Wells Fargo & Co.'s (WFC)
Wachovia unit.
In January, Honda sold a $1.3 billion deal, called Harot 2009-1,
which wasn't eligible for funding under the Fed's program. That
deal, led by Barclays, was the first auto asset-backed securities
deal of the year.
Price guidance on CNH's $760.81 million equipment loan-backed
deal is expected on Thursday.
Barclays Capital and Credit Suisse are joint leads on that deal,
dubbed CNH Equipment Trust 2009-B. Banc of America Securities, BNP
Paribas and Royal Bank of Scotland Group PLC (RBS) are
co-managers.
Market participants are expecting more deals to be offered
before next week's TALF loan-application deadline.
Investors can apply for the third time for non-recourse loans
through the central bank's program. These loans can be used to
purchase newly created bonds backed by auto, student, credit-card,
small business, equipment and floorplan loans as well as
residential mortgage servicing advances.
About $12 billion in new bonds backed mainly by auto and
credit-card loans that investors could buy using TALF have
sold.
Risk premiums on these and other consumer loan bonds have
tightened since the program's launch in March. This will eventually
lower the cost of borrowing for consumers taking on new loans.
Financial-services company USAA, which sold a $1.125 billion
deal that wasn't eligible for TALF, has said it will tap this
market again.
Ford Motor Co. (F) has also said it plans to access the TALF
program again. Ford Motor Credit, the finance arm of Ford, sold a
$2.954-billion deal backed by auto receivables in March. It was one
of the first asset-backed deals eligible under TALF to be sold.
Non-TALF issuance stands at about $9 billion so far this
year.
-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371;
anusha.shrivastava@dowjones.com