Several auto deals are marketing, boosting the sector's volume once again. Honda Motor Co. is in the market with its $1.025 billion auto ABS offering.
The transaction, called Honda Auto Receivables 2011-1 (HAROT 2011-1) is reportedly slated to price this week and managed by Bank of America Merrill Lynch and Credit Suisse.
The transaction comprises four Class A tranches, with the A-2, A-3 and A-4 classes rated triple-A by both Moody's Investors Service and Fitch Ratings. It is backed by prime-quality retail instalment auto loan contracts originated to American Honda Finance Corp. (AHFC) obligors, Moody's said in a presale report on the HAROT deal.
The class A notes will be publicly offered as fixed-rate notes and the class A-1 notes are money market eligible. Meanwhile, the non-interest-bearing certificates are not offered publicly, and will be retained by AHFC. The proceeds from the transaction will be used for general funding purposes, a Fitch presale report indicated.
Meanwhile, Ally Financial is in the market again with its second auto floorplan deal for the year named Ally Master Owner Trust Series 2011-2. The over $370 million deal comprises four parts, the largest of which is worth $300 million.
Bush Truck Leasing (BTL) is also in the market with a 144A truck leasing term ABS deal called Bush Leasing Trust 2011-A or BLT 2011-A BTL's first truck leasing term ABS offering, according to a DBRS presale report.
The deal will be backed by 77.7% terminal rental adjustment clause (TRAC) lease contracts and 22.3% $1.00 buy-out finance leases by discounted balance. DBRS analysts defined a TRAC lease as a special type of true lease that is usually used for “over-the-road” vehicles such as trucks, tractors and trailers.
These leases fall under special provisions in the Internal Revenue Service code that allow for pre-determined residual values to be negotiated in advance while maintaining the full deductibility of a true lease. The lessor remains the rights to depreciation in a TRAC lease, DBRS analysts explained.
The truck ABS will have three classes of notes, which Classes A, B and, C. According to the rating agency. there will be two reserve funds totaling $475,000 offered for a potential servicing transfer reserve of $100,000 and a trustee expense reserve of $375,000.
Other ABS transactions currently in the market include Mercedes Benz's $750 million 144A auto lease offering and Ford Motor Co. 's now $880 (upsized from $586 million, according to a Dow Jones report) dealer floorplan ABS.
According to a Bloomberg report yesterday, the Ford deal's top-rated $250 million portion that matures in 2.98 years might pay 60 basis points to 65 basis points over the benchmark swap rate. The report also said that the deal's $250 million floating-rate portion with the same maturity and rating might yield 65 basis points over one-month Libor.