Back to Headlines Print Version Buzz Up Stumble it Tweet it Facebook LinkedIn

TALF Deals Worth About $6 Billion Sold Ahead Of Deadline

By Anusha Shrivastava, Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Consumer loan-backed deals worth about $6 billion sold ahead of a monthly loan-application deadline Tuesday for the Term Asset-Backed Securities Loan Facility, or TALF, a Federal Reserve program credited with boosting securitization markets.

The latest deals push the total amount of TALF-related issuance above $90 billion since March, when the central bank decided to lend investors money at attractive rates to buy newly created asset-backed securities. The Fed has since extended TALF to include new and existing commercial mortgage bonds.

The bulk of the deals sold this month were in the auto and equipment sectors.

The largest bond to price this time is the $2.027 billion Bank of America Auto Trust deal, dubbed BAAT 2009-3, which sold a day ahead of the deadline. The largest triple-A rated tranche of the deal, worth $723 million, sold at 38 basis points over a short-term futures benchmark.

GMAC's Ally Bank sold an $884.856 million deal, dubbed Ally Auto Receivables Trust 2009-B. The largest triple-A rated tranche of the bond, worth $273 million, sold at 50 basis points over a short-term futures benchmark.

Other deals sold this week include CNH Equipment Trust's $800 million bond and Americredit's $227 million deal.

Risk premiums on securitization deals have tightened substantially since the launch of the program, and investors are increasingly using their own money to buy these bonds rather than leaning on the Fed.

Many investors, traders and underwriters say these developments illustrate how TALF has succeeded in stabilizing and reviving the market for asset-backed securities, which are an important tool to facilitate consumer spending.

"TALF is one the most successful programs and provided much-needed help to the securitization market," said Alex Wei, head of structured credit investments at Delaware Investments in Philadelphia.

TALF has made investors "comfortable about buying these assets," said Bill Bemis, head portfolio manager for the securitized products group at Avia Investors in Des Moines, Iowa.

The Fed has helped revive the market to the extent that market participants now say the program is no longer needed, at least for the consumer loan-backed portion. That said, the existence of TALF provides a buffer for the securitization market, which was frozen last year.

Other issuers this month include General Electric Small Ticket, with a $654 million deal, and Navistar International Corp., with a $350 million bond.

Several non-TALF deals also emerged, including a $591 million bond from CarMax and a $545.9 million deal from Entergy Texas Restoration Funding LLC.

World Omni's $1.04 billion deal sold, according to a term sheet.

The auto-sector deal, dubbed WOLS 2009-A, isn't eligible for funding under the TALF program. The bond has three triple-A rated tranches. The largest of these, worth $378.78 million, sold at 40 basis points over a short-term futures benchmark.

Joint leads on the deal are Bank of America/Merrill Lynch and Wells Fargo.

In April, World Omni had sold a $750 million auto-sector deal that was eligible for TALF funding. The largest tranche of that deal sold at 185 basis points over the short-term futures benchmark.

Year-to-date issuance of asset-backed securities stands at $122.5 billion, according to a note from Deutsche Bank. Last year, that figure was $156.8 billion.

So far this year, most deals have been for securitized auto loans and credit- card debt--$53.19 billion, or 43.4%, for autos and $41.56 billion, or 33.9%, for credit-card debt.

-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@ dowjones.com

  (END) Dow Jones Newswires
  11-03-091659ET
  Copyright (c) 2009 Dow Jones & Company, Inc.