UPDATE:Bulk Of TALF Eligible Deals Sold Ahead Of Loan Deadline
August 05 2009 - 4:12PM
Dow Jones News
The bulk of the deals that emerged ahead of a loan application
deadline for a Federal Reserve program have sold, according to
people familiar with the bonds.
Issuers including General Electric Co. (GE), SLM Corp. (SLM),
Wheels Inc. and First National Bank of Omaha sold newly created
bonds backed by loans for education, credit card debt and fleet
leases.
The Fed's Term Asset-Backed Securities Loan Facility, or TALF,
launched in March, offers investors loans at attractive rates to
buy newly created asset-backed securities. Over $8 billion in deals
surfaced ahead of the sixth loan deadline on Thursday. Last month,
that figure was a little over $12 billion and in June, it was $16.4
billion.
The slight dip can be attributed to the traditional summer lull,
said Jim Harrington, a senior portfolio manager at Ryan Labs Asset
Management in New York.
Most of the consumer loan-backed deals sold this year were
eligible for TALF, which helped revitalize the securitization
market and improved the availability of credit for consumers.
Initially, the program was viewed as being user-unfriendly but
the Fed's cheap loans drew investors who overcame lengthy
documentation and other implementation issues to participate. Now,
many hope it is extended past its scheduled expiration at the end
of this year.
The Fed has recently also begun to offer attractive financing
for new and existing commercial mortgage-backed loans in an effort
to revive the commercial real estate sector. The next loan
application deadline for the commercial-property portion is Aug.
20.
"Many of the TALF funds are re-allocating their dollars to
CMBS," said Dan Nigro, senior portfolio manager at Dynamic Credit
Partners in New York.
That said, no new CMBS deals have emerged in more than a year,
though some are in the works.
On Wednesday, General Electric sold two deals eligible for TALF
financing: a $1.75 billion credit card loan-backed deal dubbed
GEMNT 2009-2, was originally $1.25 billion. The single-tranche
deal, with a duration of 2.93 years, sold at 155 basis points over
a short-term benchmark. Joint leads on the bond are RBS and Credit
Suisse.
The other deal, a $500 million deal, backed by dealer floorplans
and dubbed GE Dealer Floorplan Master Note Trust 2009-1, has a
duration of 2.94 years. The single-tranche deal sold at 168 basis
points over one-month London Interbank Offered Rate, or Libor.
SLM Corp., better known as Sallie Mae, sold its $1.68 billion
deal Wednesday. The student loan-backed deal sold at 25 basis
points over prime rate, a benchmark. The single-tranche deal has a
duration of 3.86 years. Joint leads are Barclays, Bank of America
and JP Morgan.
CNH Capital America LLC sold a dealer floorplan-backed deal on
Wednesday, according to a person familiar with the matter. The
$583.25 million deal sold at 170 basis points over one-month Libor.
The bond was led by RBS and Banc of America Securities.
World Financial Network sold three deals on Wednesday. The
first, a $500 million deal of which the top-rated tranche is worth
$395 million, sold at 165 basis points over a short-term benchmark.
This portion is eligible for TALF loans.
The second is a $310 million deal in which the top-rated portion
is worth $245 million. It sold at 205 basis points over the same
benchmark.
The third, a $139 million deal, had the $110 million portion
eligible for TALF. It sold at 160 basis points over a short-term
futures benchmark.
Wheels Inc. sold a $703.3 million fleet lease-backed deal. The
triple-A-rated portion of $673.9 million sold at 155 basis points
over one-month Libor. Joint leads were Banc of America Securities
and JP Morgan.
First National Bank of Omaha's $500 million credit card
loan-backed deal sold at 135 basis points over one-month Libor.
Joint leads were JP Morgan and Bank of America.
World Omni's floorplan-backed $225 million deal sold at 170
basis points over one-month Libor. The deal was led by Barclays
Capital.
Year-to-date issuance of deals eligible for TALF funds stands at
over $60 billion.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227;
anusha.shrivastava@dowjones.com