Banc of America Securities broke into the auto whole loan sector last week with an $890 million deal and emerged as the newest member of a cadre of investment banks that have moved into the sector in recent years. The deal, tagged BASAT 2005-WF1, consists of four triple-A senior tranches and $38 million of 2.86-year subordinated bonds, rated A3' by Moody's investors Service and A+' by Standard & Poor's. The triple-B rated C class was rated only by S&P.

Pricing last Wednesday, the money market 2a7 A1 tranche came in at one basis point over Libor, one basis point wide of talk, while the one-year A2 priced at two basis points over EDSF, in line with price guidance. The two-year A3 tranche, offered in the three basis point area over swaps, priced at one basis point over swaps. The 2.83-year A4 tranche priced flat to guidance at six basis points over swaps. Down in credit, the single-A rated B-tranche priced at 28 basis points over swaps and the C-tranche priced at 47 basis points over swaps.

The deal is backed by prime retail auto loans originated by Wells Fargo Bank, N.A. sold into the Banc of America Securities Auto Trust, a shelf created specifically for principal finance transactions. Wells Fargo will retain servicing on its portfolio.

A source close to the transaction said there will likely be other deals out of the trust this year, but declined to comment on what other originators may be tapped.

Bear Stearns was the first major U.S. investment bank to open a shelf for whole auto loan deals, with a nearly $3 billion deal out of its Whole Auto Loan Trust, or WALT. The Goldman Sachs followed with its GSALT and Morgan Stanley's MSALT were soon to follow in 2003, with Merrill Lynch launching the Merrill Auto Trust Securitization last month (see ASR 6/20/05).

The trend mirrors events in the home equity sector, in which investment banks one-by-one established shelves for principal finance deals, and now such issuance is commonplace. "This is very similar to what we've seen in the home equity space," said one market observer.

A spokesperson for Wells Fargo's Home and Consumer Finance Group declined to respond to inquiries about the whole loan sale.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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