Capital One Financial's first senior/subordinated non-prime auto deal hit the market last week with a big splash as it priced through guidance, likely increasing the chances Capital One will issue that particular type of deal again.

A source familiar with the $700 million deal said it was well oversubscribed and investors were hardly concerned about the deal being Capital One's first unwrapped nonprime auto loan ABS, adding that the reputation of the company's deals helped ease any doubts. "Cap One has had a strong wind at its back for a couple of years," said the source. The deal was shown, primarily to subordinated investors, the week before last.

The deal's one-year A2 tranche priced at five basis points over EDSF, one through guidance, set in the six basis point area and its two-year A3 tranche priced on top of guidance at 11 basis points over swaps. The double-A, single-A and triple-B subordinates all priced one-to-two basis points through guidance. The deal was sold entirely to domestic buyers and went to a "good blend" of investors, the source added.

Now that Capital One knows it can generate healthy demand for senior/subordinated nonprime auto deals, it is likely to issue such bonds again. Though he could not mention any specific deals, the source said, Capital One now knows it has the option available and can issue another similar deal any time it wants to diversify its funding sources and investor base. "This was a benchmark deal for them," said the source.

A Capital One official did not respond to inquiries about the deal as of press time.

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

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.