SLM (NYSE:SLM)
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3 Anos : February 2009 para February 2012
Chrysler Financial Auto and SLM Corp. (SLM), better known as Sallie Mae, are the latest to join a clutch of issuers who are no longer offering bonds that can be bought using cheap loans through a Federal Reserve program.
Instead, these issuers are actively avoiding the Fed's Term Asset-Backed Securities Loan Facility, or TALF, by coming to market with their issues well ahead of the monthly loan application deadline. Earlier in the year, they had leaned on the program to draw investors to buy their bonds.
"To get away from logjam, auto, credit card and equipment issuers will look at this strategy of issuing deals away from the TALF subscription date," said Michael Wade, head of asset securitization origination, Americas, at Barclays Capital in New York.
Issuers and investors are once again able to operate without the Fed's direct help because risk premiums, or spreads, on these deals have tightened as the market has stabilized.
"If the spread isn't there, then the cash investors will step in to replace the TALF investors," said Jim Harrington, senior portfolio manager at Ryan Labs Asset Management.
On Tuesday, Chrysler has an $891 million auto loan-backed deal. In July, it sold a $1.02 billion deal that was eligible to be acquired with low-cost loans and guarantees made available under TALF, which the government introduced in March this year to boost the securitization market.
Sallie Mae sold its $839 million non-TALF student loan-backed deal earlier Tuesday. It sold a $2.59 billion deal in May, a $1.1 billion bond in July and a $1.68 billion deal in August; all were eligible for TALF funding.
One of the inaugural issuers via the TALF program in March, when it was first launched, Ford Motor Co. (F) is also marketing a $1.027 billion deal. In June and July, Ford sold three auto loan-backed deals that were all TALF-eligible. It returned to the market again in September, selling a $2.074 billion auto loan-backed deal that was also eligible for TALF. Most recently, in October, the company sold a $1.5 billion dealer floorplan-backed deal that could be bought using TALF funds.
World Omni Financial Corp. this month raised $1.04 billion for an auto loan-backed deal without having to tap the TALF program. In April, it had been one of the issuers to take advantage of the TALF program, raising $750 million.
USAA Auto Owner Trust sold a $1 billion non-TALF bond on Nov. 5, two days after the loan-application deadline for November, and CarMax and Entergy Texas Restoration Funding LLC have also recently raised money without the Fed's help.
"It's the continued process," Wade of Barclays said, "of the ABS market weaning itself from the TALF program."
The next deadline for the consumer-loan-backed portion of TALF is Dec. 3.
The spike in issuance this week is also because the holiday season is traditionally slow, said Dan Nigro, a portfolio manager at Dynamic Credit Partners in New York.
"The sidewalks will get rolled up soon," he said, noting those who have had a good year want to wrap up their books about now.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@dowjones.com