JPMorgan, the biggest U.S. bank by assets, plans to sell $750 million of bonds tied to credit-card debt set to mature in five years. The securities are rated AAA by Standard & Poor’s and Fitch Ratings, according to a person familiar with the transaction who declined to be identified because terms aren’t set. The New York-based bank is managing the sale, with HSBC Holdings Plc and Royal Bank of Canada, according to a regulatory filing. Justin Perras, a spokesman for New York-based JPMorgan, declined to immediately comment.
Companies have sold about $92 billion of asset-backed bonds tied to consumer and business lending this year, compared with $87 billion in the first six months of 2011, according to data compiled by Bloomberg. Debt tied to credit-card sales account for $11 billion of 2012 issuance, compared with $45 for automobile debt and $7 billion for notes backed by student loans, the data show.
Investors are demanding 61 basis points more yield than on Treasuries to hold top-ranked asset-backed securities linked to everything from auto loans to timeshare payments, according to a Bank of America Merrill Lynch index. The spread is down from 93 basis points at the end of last year. A basis point is 0.01 percentage point.
Top-ranked debt backed by auto loans is yielding 56 basis points more than Treasuries, down from 65 basis points on May 15, according to a Bank of America Merrill Lynch index. The securities returned 0.07 percent in May. That compares with 0.33 percent for bonds tied to credit-card payments and 0.58 percent for investment-grade corporate bonds, index data show.
Volkswagen, based in Wolfsburg, Germany, plans to sell a 1 billion euro ($1.25 billion) lease bond, according to data compiled by Bloomberg. The deal, run by JPMorgan and Royal Bank of Scotland Plc, may be all fixed-rate securities graded AAA by S&P and Fitch with a 1.5 percent yield, according to a person familiar with offering who declined to be identified because terms aren’t set.
CNH Global NV (CNH), the part-owned unit of truck and tractor manufacturer Fiat Industrial SpA, is planning to sell $750 million of bonds backed by loans for equipment. The deal is run by Credit Suisse AG, Credit Agricole SA and RBS.
The Amsterdam-based company sold $996 million of equipment bonds in March and $811 million in December.
S&P boosted CNH’s outlook to “stable” in March, citing better-than-expected 2011 financial results, and that Fiat Industrial’s diversification “should offset” weaker truck sales in Southern Europe.
JPMorgan is also planning to sell a conduit bond, according to a filing with the U.S. Securities and Exchange Commission, backed by loans including California’s Palazzo Westwood Village; Doubletree Corp.’s Wit Hotel in Chicago; 100 West Putnam in Greenwich, Connecticut; Louisville, Kentucky’s Jefferson Mall; and Southpark Mall in Colonial Heights, Virginia.
Moody’s Investors Service said last week the gap is widening between strong shopping centers that can attract tenants and those that may be on a path toward liquidation amid “sluggish” economic growth. Moody’s is changing how it assesses the weakest shopping-mall loans packaged into commercial-mortgage bonds to compensate for a growing number of properties that may struggle to survive.
SolarCity Corp., the developer of rooftop solar power systems that is working on its initial public offering, plans to use solar panel installations on Wal-Mart Stores Inc. in Arizona, California, Colorado, and 150 leases in pipeline as collateral for first securitization, Asset-Backed Alert reported last week. The San Mateo, California-based company may have $3 billion of commercial, residential solar-equipment leases ready to securitize by year-end 2015. The size and timing haven’t been determined.
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