AmeriCredit Corp. said it closed a $290 million residual financing facility, which will act as credit enhancement in future senior/subordinate securitizations. Deutsche Bank Securities is the lead banker, with Barclays Capital, JPMorgan Securities, Wachovia Securities and Credit Suisse First Boston participating in the deal.
Via the facility, AmeriCredit is locking in subordinate/residual investment in its future deals, allowing the firm to manage its funding risk. Essentially, AmeriCredit could bring a senior/subordinate ABS without having to place the sub bonds in the market. Typically, the B-piece, which is rated single-B or double-B, is the most difficult tranche to place, especially for a subprime lender in the current risk adverse investor environment.
"If for whatever reason the double-B market was unfavorable, we would consider using the facility," said a spokesperson for AmeriCredit.
Other lenders, such as Ugly Duckling Corp., have established residual financing facilities, though AmeriCredit's rendition is unique, as it lines up funding ahead of time, locking in an advance rate.
AmeriCredit last securitized during the first week of August. All classes of the $1.3 billion transaction were wrapped to a triple-A by Financial Security Assurance. AmeriCredit anticipates closing another deal before the end of the quarter, though wasn't able to provide details.