ABS Issuance Perks Up Ahead Of Quarter's End

30th Jun 2010 18:26

By Prabha Natarajan Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--A handful of asset-backed securities backed by loans to consumers hit the market this week, as banks try to clear their books ahead of quarter's end. More than $5.326 billion of such deals were announced and are expected to be sold before investors break for the holiday weekend. "New deals are being pushed through before" the Fourth of July weekend, said James Harrington, an investor in these bonds. "A lot of firms don't like to make commitments over month/quarter end." The deal flow was spread through all loan sectors -- autos, credit cards and student loans. CarMax, the used car retailer, has a $650 million issue with six classes. The largest triple-A class of $249 million has a price guidance in the area of 30 basis points over a benchmark. It is expected to price Wednesday. The other deal, called SMART 10-1US, is a $500 million issue backed by Australian auto leases and loans originated by Macquarie Leasing. This is the company's first U.S. issue, and points to "improving confidence of offshore investors in Australian securitized transactions," said Ilya Serov, Moody's lead analyst for the transaction. Auto-loan backed issues are popular with investors who find the sector's steady performance appealing amid the concerns about other debt instruments. Issuers, however, are hoping investors' appetites extend to other consumer-loan backed issuance. Three student-loan issues are out from banks. A $1.701 billion Sallie Mae issue is being issued concurrently with the redemption and refinancing of SLM 2009-A. The new issue is being supported by the same collateral as the 2009 issue. The top class of $451 million is expected to price over one-month Libor. Barclays's (BCS) Barclays Capital, Bank of America (BAC), Credit Suisse (CS) and Royal Bank of Scotland (RBS) are on the deal. Another student-loan backed issue was announced on Tuesday. The $855 million issue is from Student Loan Corp., which is 80% owned by Citigroup (C), the sole bookrunner on the deal. The third student-loan deal is a $1.231 billion offering from Bank of America Student Loan Trust 2010-1. The issue's single class carries a triple-A rating, and carries a price guidance of 75 to 85 basis points over three-month Libor. Bank of America is the lead on the transaction. While credit card issues have been light for most of this year, here's one for investors looking to diversify risk. A $450 million credit-card deal from World Financial Network was launched Wednesday. Barclays Capital and Bank of America are the leads on the deal. The top-rated deal, $355.5 million in size, has a guidance in the area of 175 to 200 basis points over swaps. -By Prabha Natarajan, Dow Jones Newswires; 212-416-2468; [email protected] (END) Dow Jones Newswires June 30, 2010 13:26 ET (17:26 GMT)