UPDATE: TALF-Eligible Deals Emerge Ahead Of Aug 6 Deadline
July 30 2009 - 1:44PM
Dow Jones News
A clutch of deals eligible for cheap financing under a Federal
Reserve program have emerged ahead of next week's loan application
deadline.
The Fed offers loans on newly created consumer loan-backed deals
through its Term Asset-Backed Securities Loan Facility, or TALF,
and the sixth deadline for loan applications for this sector is
Aug. 6.
A substantial portion of the consumer loan-backed deals sold
this year were eligible for TALF. The program was launched in March
and received a lukewarm welcome, but issuers and investors have
since warmed up to it. It is credited with having thawed the
securitization market and helping lower borrowing costs for
consumers.
The central bank has recently also begun to offer similar
attractive financing for new and existing commercial
mortgage-backed loans in an effort to revive that sector. The next
loan application deadline for the commercial property portion is
Aug. 20.
"It made sense that the initial focus of TALF was on the auto,
credit-card and student-loan sectors so it could restart those
markets," said Howard Chin, a portfolio manager at Guardian
Investor Services in New York.
On Thursday, First National Bank of Omaha is marketing a
single-tranche $500 million credit card loan-backed deal with a
maturity of 2.93 years. The issue, dubbed FNMNT 09-3, is scheduled
to price early next week, according to a person familiar with the
matter. Joint leads on the deal are JP Morgan Chase & Co. (JPM)
and Bank of America (BAC).
Wheels Inc. is offering a $703.3 million TALF-eligible fleet
lease-backed deal, according to a person familiar with the deal.
Price guidance is out on the issue, dubbed Wheels 2009-1. On the
top-rated tranche worth $673.9 million and with a duration of one
to 36 months, it is in the range of 165-175 basis points over the
one-month London Interbank Offered Rate, or Libor. Joint leads on
the deal are Banc of America Securities and JP Morgan Chase.
Student lender SLM Corp. (SLM), better known as Sallie Mae, is
also offering a TALF-eligible $1.68 billion student loan-backed
deal, according to a person familiar with the matter. The deal,
dubbed SLM Student Loan Trust 2009-D, has Barclays Capital, Bank of
America and JP Morgan as joint leads.
Issuance of asset-backed securities stands at nearly $80 billion
this year, down from $126 billion at this time last year, according
to Asset-Backed Alert, a trade publication.
In July, eight TALF-eligible consumer loan-backed deals worth
$12.079 billion were sold. Issuers included Honda Motor Co. (HMC),
Harley-Davidson Inc. (HOG), Ford Motor Co. (F) and Chrysler Group
LLC. In the previous month, 13 deals worth $16.4 billion were
sold.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227;
anusha.shrivastava@dowjones.com