Bulk Of TALF-Eligible Deals Sold Ahead Of Loan Deadline
02 October 2009 - 6:53AM
Dow Jones News
American Home Mortgage Advance Trust is the latest to sell a
bond ahead of the eighth loan application deadline for a Federal
Reserve program.
Friday is the deadline for investors to procure cheap funds from
the central bank to buy newly created consumer loan-backed bonds
through its Term Asset-Backed Securities Loan Facility, or TALF.
Deals worth about $6.5 billion were issued ahead of this
deadline.
American Home Mortgage's deal sold at 195 basis points over the
one-month London interbank offered rate, or Libor. Joint leads on
the deal were Deutsche Bank and RBS.
Earlier Thursday, Harley Davidson Inc.'s (HOG) $700 million deal
also sold, according to a person familiar with the matter. The
deal, dubbed HDMOT 2009-3, had four tranches. The largest triple-A
rated tranche sold at 35 basis points over a short-term futures
benchmark.
Citi Financial Auto sold its $1.40 billion auto-sector deal,
according to a people familiar with the deal. The bond is dubbed
CFAIT 2009-1 and its largest triple-A rated tranche worth $570
million sold at 125 basis points over a short-term futures
benchmark, in line with guidance.
The Fed's efforts to support the securitization market, where
consumer loans are packaged into bonds for sale to investors, has
helped rejuvenate it. The process of securitization aided the
ramping up of credit and helped fuel the lending boom that came to
an abrupt halt with the credit crisis.
More than $100 billion in such deals have been sold since the
launch of the TALF program in March, with the bulk being eligible
for the Fed's facility. About $15 billion in bonds sold in the last
round of TALF loan applications in September.
The attractive terms of the program, where investors can walk
away from the loans if anything goes awry, has drawn them to this
market.
Other issuers this time around include Mercedes-Benz Financial
and Ford Motor Co. (F), both of which sold deals earlier this
week.
Mercedes's deal is dubbed MBART 09-1, and its largest triple-A
tranche worth $445 million sold at 30 basis points over a
benchmark, in line with guidance. Joint leads on the bond are
Barclays Capital and JP Morgan.
Ford Motor's $1.5 billion dealer floorplan-backed bond was
called FORDF 09-2. It priced at 155 basis points over one-month
Libor. The deal was increased in size from an original $1 billion.
Joint leads on the deal are Barclays Capital and Morgan
Stanley.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227;
anusha.shrivastava@dowjones.com