(Corrects name of United Nations Federal Credit Union in seventh paragraph of story published yesterday.)
Nissan Motor Co., Bayerische Motoren Werke AG and AmeriCredit Corp. lead companies selling at least $3.6 billion of asset-backed securities tied to U.S. consumer debt, a market in which total issuance is expected to fall 25 percent this year, according to Wells Fargo Securities.
Nissan, the Yokohama, Japan-based vehicle maker, is selling $1 billion of securities backed by consumer payments on car loans, according to a person familiar with the transaction who declined to be identified because terms aren’t public. BMW, based in Munich, is issuing $750 million of similar debt tied to car leases and AmeriCredit plans to sell $700 million of bonds backed by auto loan payments, according to people familiar with those offerings. Discover Financial Services increased an offer of credit-card related debt to $600 million from $500 million.
“The market is receiving the transactions very well,” Brian Wiele, a managing director at Barclays Capital, said in a telephone interview. “Compared to other alternatives, ABS still offers compelling relative value for investors.”
Sales of securities tied to household borrowing have declined this year as consumers cut back on spending. The so- called asset-backed market may not reach $100 billion in issuance in 2010, down from $135 billion in 2009, according to a Sept. 10 report from Wells Fargo Securities.
Other companies now marketing asset-backed debt are Cabela’s Inc., a Sidney, Nebraska-based retailer specializing in hunting and fishing equipment; and Access to Loans for Learning Student Loan Corp.
Discover of Riverwoods, Illinois, sold $600 million of securities backed by the income stream from credit-card payments, according to people familiar with the planned sales. The top-rated securities, maturing in about five years, yield 58 basis points more than the one-month London interbank offered rate.
“The outlook for a lower-than-normal new issuance calendar together with a demand for higher-yielding assets could pressure spreads a bit lower in the immediate months ahead,” Chris Sullivan, chief investment officer at the United Nations Federal Credit Union in New York, said in an e-mail.
The spread is the extra yield over a benchmark interest rate that investors demand to hold a bond.
Car loans have dominated bond sales tied to consumer debt this year, accounting for $43 billion of the $64 billion marketed, according to data compiled by Bloomberg.
Top-rated securities backed by auto loans yield about 58 basis points more than Treasuries, according to a Bank of America Merrill Lynch index. On Jan. 4, the debt was yielding 79 basis points more than Treasuries. A basis point is 0.01 percentage point.
To contact the reporter on this story: Sarah Mulholland in New York at firstname.lastname@example.org