March 17 (Bloomberg) -- The finance arm of Nissan Motor Co. plans to sell $1.3 billion in securities backed by auto loans in one of the first debt offerings eligible for a U.S. government program to boost consumer lending.

The largest AAA portion of the sale maturing in 1.98 years may price to yield between about 185 basis points and 200 basis points more than benchmark interest rates, according to a person familiar with the sale who declined to be identified because terms aren’t public.

The sale signals the start of the Federal Reserve’s $200 billion program to bolster lending to consumers by unfreezing the market for asset-backed securities. Investors may buy the top- rated bonds from Nissan with loans from the Term Asset-Backed Securities Loan Facility, or TALF. Sales of debt backed by consumer loans plunged 40 percent last year, according to Bloomberg data, choking off funding to lenders.

The first phase of the TALF may finance the purchase of AAA rated securities containing loans for autos, education, credit cards and small businesses. Officials eventually plan to finance other assets, including commercial mortgage-backed securities.

The Nissan offering is expected to price on March 19, the person said. JPMorgan Chase & Co. and Bank of America Corp. are underwriting the bonds.

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

Last Updated: March 17, 2009 16:13 EDT