About $12B In TALF Eligible Deals Emerge Ahead Of Deadline

From the Wall Street Journal By Anusha Shrivastava Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–About $12 billion in consumer loan-backed deals have emerged ahead of a loan-application deadline for cheap funding under a Federal Reserve program.

Issuers include Ford Motor Co. (F) unit Ford Motor Credit, Chesapeake Funding LLC, Nissan Motor Co. (NSANY) and American Express (AXP).

Ford has a $2 billion deal eligible for the central bank’s Term Asset-Backed Securities Loan Facility, or TALF. The loan deadline for the consumer asset-backed securities portion of the facility is Sept. 3.

Discover (DFS) has a $1 billion credit-card-loan-backed deal while Chesapeake Funding LLC has a $750 million auto and other vehicle lease-backed deal.

Hyundai Motor Co. (005380.SE) is another issuer in the market, with a deal eligible for funding under TALF.

The $1.32 billion deal, dubbed Hyundai Auto Receivables Trust, HART 2009-A, will be backed by a pool of prime retail loan contracts secured by new and used automobiles and light-duty trucks originated and serviced by Hyundai Capital America. The deal is Hyundai’s first securitization of the year and joins the growing list of deals emerging ahead of the seventh loan application deadline for TALF.

General Electric Capital Corp. has a $618.4 million deal, backed by equipment loans like those secured by transportation, industrial and construction equipment. Joint leads are Bank of America Merrill Lynch and Barclays Capital.

American Express Co. has a $1 billion credit-card-loan-backed deal that has price guidance in the area of 140 basis points over the one-month London Interbank Offered Rate. American Express had sold a $1 billion credit-card-loan-backed deal in June at 135 basis points over one-month LIBOR. Joint leads on the current deal are Barclays Capital, JP Morgan and RBS.

Nissan is in the market with a $1.024 billion auto-loan-backed deal. Dubbed NALT 2009-B, it is due to price on Sept. 2, a day ahead of the loan application deadline for this round of TALF.

The deal is jointly led by Citigroup, Deutsche Bank and JP Morgan.

Nissan was among the first batch of issuers in March when TALF was launched. At the time, it sold a $1.3 billion auto-loan-backed deal at 180 basis points over a benchmark.

On Wednesday, Bank of America Merrill Lynch offered a $1.995 billion auto-loan-backed deal, eligible for TALF, according to a person familiar with the matter. Bank of America’s deal, dubbed BAAT 2009-2, is jointly led by Bank of America/Merrill Lynch, Barclays Capital, Citigroup, Credit Suisse and Royal Bank of Scotland.

Last month, Bank of America (BAC) sold a $3.993 billion auto-loan-backed deal at 135 basis points over a benchmark. That was the bank’s first deal eligible under TALF.

Through TALF, investors can procure cheap loans to buy newly created consumer-loan-backed and new and existing commercial mortgage-backed bonds. The program was set up in March to revitalize the securitization market, shuttered following the bankruptcy of Lehman Brothers Holdings Inc. That market, in which banks sell loans packaged as securities on to investors, is vital to keeping credit flowing to the broader economy.

Initially targeted at securities backed by consumer loans, it was expanded to include commercial mortgage-loan-backed bonds. The program was set to expire Dec. 31, but last week the Fed and the Treasury Department extended their support, citing “impaired” conditions in financial markets.

TALF loans against newly issued asset-backed securities and existing commercial mortgage-backed securities will be extended through March 31, 2010. For newly issued CMBS, which take a significant amount of time to put together, the extension is until June 30, 2010.

Since the launch of the program, $85.45 billion in consumer-loan-backed deals have been sold, the bulk using non-recourse loans at attractive rates from the Fed.

Last month, $8.26 billion worth of TALF-eligible consumer-loan-backed deals were sold. In July, that figure was $12.7 billion.

There have been no new CMBS deals, but some are said to be in the works. Blogger Note: added bold and contrasting color for emphasis. The biggest problem facing commercial real estate is the capital markets’ lack of liquidity. CMBS issuance went from $230 billion in 2007 to $12 billion in 2008 to less than a billion dollars YTD in 2009 (send an e-mail to moc.laicnanifnosibnull@evad and I will supply you with my research source materials). While I am an avowed Free Market Capitalist… this move by the government is what we need to get liquidity in the capital markets.

The next loan application deadline for the ABS portion of the program is Sept. 3, and for CMBS it is Sept. 17.

-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; moc.senojwodnull@avatsavirhs.ahsuna

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