3rd UPDATE: Auto Sector Of Asset-Backed Bond Market Busy Again
November 08 2010 - 2:27PM
Dow Jones News
The automotive sector of the consumer loan-backed bond market is
busy again Monday.
Nissan Motor Co. (NSANY, 7201.TO) is offering a $750 million
auto-lease backed bond, and automobile finance company AmeriCredit,
which was recently acquired by General Motors Co., is tapping the
market with a $700 million bond, according to people familiar with
the matter.
AmeriCredit's bond is backed by subprime auto loans. The bond
has six tranches, the largest of which is valued at $223
million.
Joint lead managers on the deal are J.P. Morgan, Credit Suisse,
Deutsche Bank and Royal Bank of Scotland.
Both bonds are scheduled to price on Wednesday.
The auto sector of the asset-backed bond market has been active,
with deals coming from Ally Financial Inc., Honda Motor Co. (HMC,
7267.TO) and Ford Motor Co. (F). Several auto issuers have tapped
the market multiple times in 2010, and now some say they are done
with asset-backed deals for the year.
German automaker Daimler AG (DAI.XE), for instance, won't be
tapping this market in 2010. "We will not issue any more ABS this
year," said Bodo Uebber, chief financial officer of Daimler, at a
meeting on Friday.
He said the company will return next year because the market
provides flexibility.
ABS for cars is a "good" product, he said, not one that created
a bubble. "It has cars behind it, not derivatives."
Investors like auto ABS because of their short maturities and
overall strong performance.
Year to date through Thursday, asset-backed securities valued at
$86.77 billion were sold, according to data from Citigroup. Of
this, the auto sector contributed $50.95 billion, or about 60%.
Last year by this time, securities worth $122.48 billion were sold.
Of that, the auto sector comprised 43.89%, at $53.77 billion.
"The volume of auto issuance is the same this year as in
previous years, it's just that there's very little supply coming
from other asset classes like student loans or credit cards
competing for air time," said John Cho, head of auto ABS issuance
at J.P. Morgan. "Looking ahead, I expect issuance volumes to be
relatively consistent between now and the end of the month, with a
couple more deals in December to close out the year."
CNH Global NV (CNH, NHL.XE) is also in the market with a $721
million equipment loan-backed bond, according to a person familiar
with the matter. CNH makes agricultural and construction
equipment.
The bond is jointly led by Royal Bank of Scotland, Credit
Agricole and Societe Generale.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227;
anusha.shrivastava@dowjones.com
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