Ford Motor Co., Bayerische Motoren Werke AG and Honda Motor Co. are marketing $3.15 billion in securities linked to loans and leases as vehicle sales rise.
Ford plans to sell $1.4 billion in debt backed by auto loans, according to a person familiar with the offering who declined to be identified because terms aren’t public. Honda is offering $1 billion of similar securities, said another person. BMW, based in Munich, plans to sell $750 million of bonds tied to leases, the people said.
Bonds linked to auto debt are dominating asset-backed sales as vehicle purchases climb. Bank of America Merrill Lynch boosted its 2012 issuance forecast of the securities to $100 billion from $80 billion, according to an April 13 report.
“Higher vehicle sales and the potential for more bank issuance have caused us to revise our gross new issue,” said the New York-based analysts led by Chris Flanagan.
Companies have sold about $55 billion of bonds backed by consumer and business lending this year, according to data compiled by Bloomberg. Securities linked to automobile sales accounted for $28 billion of those offerings, the data show.
Bank of America sold $2.37 billion in bonds backed by auto loans on April 13 in the largest offering of the debt this year, Bloomberg data show. The deal “may signal a broader return of banks to the auto loan ABS market,” the analysts said.
March Car Sales
U.S. sales of cars and light trucks rose 13 percent in March, sending the industry to the best quarterly pace since 2008, according to researcher Autodata Corp. Deliveries accelerated to a 14.4 million at a seasonally adjusted annual rate from 13.1 million a year earlier, according Autodata.
Investors are demanding 59 basis points more than Treasuries to hold top-ranked asset-backed securities linked to auto loans, according to a Bank of America Merrill Lynch index. The spread had climbed to 94 basis points as of Dec. 31 from 60 basis points at the start of July. A basis point is 0.01 percentage point.
Ford sold $1.6 billion debt backed by auto loans on Jan. 18, according to Bloomberg data. The top-ranked securities maturing in 2.3 years priced to yield 23 basis points more than the benchmark swap rate. Honda paid 18 basis points over the benchmark at its most recent sale of similar debt on Feb. 14.
The sale from BMW is the automaker’s first offering of its kind this year, the data show. The company sold $1 billion of the debt in April 2011, paying a spread of 37 basis points more than swaps. Issues composed of lease payments are more dependent on used car values and typically pay a higher spread.