Toyota, Ally auto ABS deals meet solid demand

By Nancy Leinfuss

NEW YORK, April 29 (BestGrowthStock) – Underwriters for Toyota
Auto and Ally Master Owner Trust asset-backed offerings on
Thursday launched larger-than-expected auto sales at tighter
spread levels as investors chased supply, market sources
said.

Toyota Auto Owner Trust’s $1.25 billion auto ABS deal was
increased from a $775 million size as interest grew in the
offering. The deal’s AAA-rated one-year notes were launched at
a spread of 13 basis points over Eurodollar swap futures,
compared with earlier price guidance of 15 to 20 basis
points.

Its AAA-rated two-year notes were launched at a spread of
15 basis points over Eurodollar swap futures, versus earlier
guidance of 18 to 20 basis points, while its 2.86-year
AAA-rated notes were launched at a spread of 18 basis points
over interpolated swaps, compared with earlier guidance of 20
to 25 basis points, market sources said.

JPMorgan Securities, Barclays Capital and Bank of America
Merrill Lynch are lead managers for Toyota’s sale, which is
expected to price later today, market sources said.

“There was solid appetite for Toyota and Ally deals. Both
were increased in size and saw spreads tighten before
launching,” one bond investor said. “The auto segment
continues to be the driving force behind supply.”

Among other sales launched on Thursday, Ally Master Owner
Trust was selling a larger $703 million sale of auto
securities that grew from an initial size of $350 million,
given the solid demand from investors.

The deal’s largest $450 million AAA-rated 2.94-year
tranche was launched at a spread of 115 basis points over
interpolated swaps, compared with earlier guidance of 125
basis points, market sources said. Ally’s offering included
smaller AA-rated, A-rated and BBB-rated issues that launched
at spreads of 175 basis points, 215 basis points and 275 basis
points over interpolated swaps respectively, market sources
said.

Barclays Capital, Citigroup and Credit Suisse are lead
undewriters for Ally’s auto deal, sources said.

The auto ABS segment has led issuance in the asset-backed
market this year, comprising some $18 billion of the $35
billion of securities sold to investors.

“The auto segment has kept up with issuance expectations.
Auto sales have been robust and consumer performance in this
area has been greater than expected,” said William Bemis, ABS
portfolio manager at Aviva Investors.

Still, demand for securities continues to outstrip
available supply. The credit card segment, which also
comprised a large portion of issuance in previous years, has
totaled just $2 billion this year amid sweeping changes to the
securitization landscape.

A tougher regulatory and legislative environment, combined
with new accounting rules and tighter lending standards, have
all worked to clamp down on credit card issuance.

Issuers sold some $69 billion of auto securities and $49
billion of credit card securities with some help from the
Federal Reserve’s emergency loan program in 2010.

Stock Market
(Editing by Jan Paschal )

Toyota, Ally auto ABS deals meet solid demand