Nissan Motor Co. (NSANY) is in the market with a $1.024 billion auto-loan backed deal that is eligible for funding under a Federal Reserve program, according to a person familiar with the matter.

The deal, dubbed NALT 2009-B, is due to price Sept. 2, a day ahead of the next loan application deadline for the Fed's Term Asset Backed Securities Loan Facility, or TALF, through which investors can procure cheap loans to buy newly created consumer loan-backed and new and existing commercial mortgage-backed bonds.

The deal is jointly led by Citigroup, Deutsche Bank and JP Morgan.

On Wednesday, Bank of America/Merrill Lynch offered a $1.995 billion auto loan-backed deal, eligible for TALF, according to a person familiar with the matter.

Bank of America's deal, dubbed BAAT 2009-2, is jointly led by Bank of America/Merrill Lynch, Barclays Capital, Citigroup, Credit Suisse and Royal Bank of Scotland.

Last month, Bank of America (BAC) sold a $3.993 billion auto-loan backed deal at 135 basis points over a benchmark. That was the bank's first deal eligible under TALF.

TALF was set up in March to revitalize the securitization market, shuttered following the collapse of Lehman Brothers Holdings Inc. (LEHMQ). That market, in which banks sell loans packaged as securities on to investors, is vital in keeping credit flowing to the broader economy.

Initially targeted at securities backed by consumer loans, it was expanded to include commercial mortgage loan-backed bonds. The program was set to expire Dec. 31. Last week, the central bank and the Treasury Department extended their support, citing "impaired" conditions in financial markets.

TALF loans against newly issued asset-backed securities and existing commercial mortgage-backed securities will be extended through March 31, 2010. For newly issued CMBS, which take a significant amount of time to put together, the extension is until June 30, 2010.

Since the launch of the program, $85.45 billion in consumer loan-backed deals have been sold, the bulk of it using non-recourse loans at attractive rates from the Fed.

TALF has not just revived issuance, it's also revived investors' appetite: recently, ABS deals have been increased to $5 billion as investors took advantage of the Fed's cheap loans. That's reminiscent of the pre-crisis days, when deals were regularly increased in size to the $6 billion to $10 billion range.

There have been no new CMBS deals but some are said to be in the works.

The next loan application deadline for the ABS portion of the program is Sept. 3. For CMBS, the dealine is Sept. 17.

-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@dowjones.com