Lloyds Australia Unit Will Issue Asset-Backed Notes

Dec. 6 (Bloomberg) -- An Australian unit of Lloyds Banking Group Plc plans to issue A$367.5 million ($363 million) of bonds backed by vehicle loans in its second sale of the securities this year.

Capital Finance Australia Ltd. will sell the notes, backed by more than 16,500 auto loans, according to an e-mailed statement from Moody’s Investors Service. It’s marketing the main class of notes to yield from 155 basis points to 160 basis points more than the one-month bank bill swap rate, according to a preliminary sales document seen by Bloomberg News.

The U.S. subprime collapse froze Australia’s securitization markets as investors shunned all but the safest, simplest forms of debt. Even as the number of asset-backed sales rebounded to a record this year, the average deal size is smaller and investors are demanding that transactions be more conservatively structured, Moody’s said today.

The transaction is the 11th sale of asset-backed securities rated by Moody’s this year, and the second by Capital Finance, according to the risk assessor. “The healthy levels of activity this year underline that securitization remains a vital funding source for smaller banks and non-bank players,” Moody’s said.

The shortest-dated portion of notes in Capital Finance’s latest sale may yield a spread of about 60 basis points, according to the preliminary sales document. Westpac Banking Corp., Macquarie Group Ltd. and Lloyds are managing the sale, it states.

Capital Finance issued A$612 million of notes in July, according to data compiled by Bloomberg. The main class of notes totaled A$500 million and was priced to yield a 165 basis-point spread, the data show. A basis point is 0.01 percentage point.

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net.

To contact the editor responsible for this story: Will McSheehy at wmcsheehy@bloomberg.net.