ABS issuers gear up $2.5 bln sales as demand rises

By Nancy Leinfuss

NEW YORK, May 17 (BestGrowthStock) – The U.S. asset-backed market
kicked off the week with $2.5 billion in fresh supply on Monday
as issuers capitalize on growing demand to sell securities at
reduced funding costs.

The robust appetite for securities backed by consumer debt
like auto loans, credit cards and student loans has lowered
funding costs for issuers this year. Recent oversubscribed
sales have allowed issuers to price their deals at leaner
spreads.

“Many of the auto deals have tested new levels. There’s
plenty of demand out there from investors, and that’s keeping
spreads tighter,” said one ABS portfolio manager.

Sales totaling $2.5 billion from Honda Auto Receivables
Trust, AmeriCredit Auto Owner Trust and Volvo Financial, all
met with strong reception last week, allowing issuers to price
their sales cheaper, investors said.

The auto segment continues to dominate the new issue
landscape this year, with sales comprising 50 percent of the
$49 billion of securities sold in 2010.

This week’s securities offerings are also led by the auto
sector, sources said.

The latest offering from Santander Drive Auto Receivables
Trust dubbed “SDART 10-1,” is being marketed to investors by
Credit Suisse, Wells Fargo Securities and Santander, market
sources said. The $1 billion sale includes A1-plus rated
0.18-year short-term notes and AAA-rated 0.9-year notes,
2.15-year notes and 3.05-year securities, sources said.

Another $750 million auto-lease deal from Nissan Auto Lease
Trust dubbed “NALT 2010-A” is being marketed to investors by
underwriters JPMorgan Securities, Citigroup and Deutsche Bank
Securities, market sources said. The sale includes an A1-plus
rated 0.35-year short-term note tranche and AAA-rated 0.9-year
notes, 1.64-year notes and 2.11-year notes, sources said.

In the student-loan segment, an $817.7 million deal for the
Higher Education Loan Authority for the State of Missouri,
dubbed “MOHELA 2010-2,” was offered on Monday through sole
manager Morgan Stanley, market sources said. The sale includes
AAA-rated 5.72-year notes that are expected to price in the
area of 85 basis points over three-month Libor, sources said.

Penny Stocks

(Editing by Jeffrey Benkoe)

ABS issuers gear up $2.5 bln sales as demand rises