The fifth round under the Federal Reserve's TALF program grew to $8.1 billion on Tuesday and is largely being shaped by auto ABS issuers as two new deals join the queue of securities offered ahead of the July 7's subscription deadline.
Through its Term Asset-Backed Securities Loan Facility, known as TALF, the Fed aims to unclog consumer lending and reopen the securitization markets, crucial to issuers of ABS. Under the program, the central bank makes loans available to investors for the purchase of securities backed by consumer loans.
Honda Auto is the latest auto ABS issuer to join July's lineup of issuers. Its deal includes $1.5 billion of securities backed by auto loans. The deal, marketed by underwriters Banc of America Securities and Credit Suisse, includes AAA-rated one-year, two-year and three-year notes, market sources said.
Another $1.2 billion of TALF-eligible auto ABS will come from Chrysler Financial Auto through lead manager Deutsche Bank and includes AAA-rated one-year and two-year notes, market sources said.
In another auto sale, Bank of America Auto Trust is issuing $2.5 billion of securities backed by auto loans, while AmeriCredit Auto will offer $725 million of securities backed by auto loans through underwriters Deutsche Bank and Credit Suisse.
In the credit card segment, Discover is planning a TALF-eligible $1 billion sale of 2.92-year AAA-rated credit card securities through underwriters Deutsche Bank and Barclays Capital, while in the student loan segment SLM Corp will offer $1.1 billion of securities, market sources said.
Issuers have sold about $42 billion of supply under the TALF program since its launch in March. Growing demand for ABS securities has driven spreads dramatically tighter from their record wides during a deepening credit crisis in late 2008.
(Reporting by Nancy Leinfuss; Editing by Padraic Cassidy)