AmeriCredit Corp. closed its smallest deal of the year last week, a $500 million subprime auto transaction, the company's first public deal with a senior/subordinate credit enhancement structure, according to spokeswoman Kim Pulliam.
Expect a $600 million to $800 million follow-up deal later this quarter from AmeriCredit, featuring the company's standard triple-A wrap structure (generally provided for by Financial Security Assurance).
AmeriCredit veered from its quarterly $1 billion-plus wrapped deal to access a wider range of investors.
"We had some investors specifically request higher yielding paper," Pulliam said. "They are able to get that with some of the subordinate tranches."
AmeriCredit's prior deal, which closed in August, was worth $1.1 billion and structured in four A-class tranches, one with a short-term P-1/A-1+ rating and three with triple-A ratings.
Last week's deal was definitely a divergence. Subordinating the three A-class pieces were four additional classes: from the double-A rated B-class notes down to the double-B rated E-class notes. The three-year B-class notes were talked at swaps plus 50 to 55. Pricing on the subordinates was not available.
The highest yielding tranche of AmeriCredit's August priced at swaps plus 20, according to published reports.
"This is something that we tried for the first time, yet it will go to supplement the wrapped transactions as well," Pulliam said. "We expect to still be in the market quarterly with a wrapped transaction."