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Ford, Honda, BMW Price Auto ABS

Auto ABS continues to dominate primary market activity this month with another three deals priced that include Ford’s benchmark $1.7 billion floorplan ABS deal.

Ford priced the triple-A notes from Series 2013-1, at 38 basis points over Libor. The double-A notes priced at 65 basis points; the single-A notes priced at 90 basis points and the triple-B notes priced at 135 basis points. All notes were structured with a 2.98-year average life maturity.

American Honda Finance upsized its deal, Honda Auto Receivables 2013-1 Owner Trust to $1.25 billion from $1.025 billion ahead of pricing on Wednesday afternoon. The deal’s triple-A rated class A-2 notes offered with a 1.05-year average life maturity, priced at 4 basis points over the eurodollar spot forward benchmark. The A-3 notes with an average life maturity of 2.10- years and A-4 notes with an average life maturity of 3.05-years priced at 10 basis points over interest rate swaps and 14 basis points respectively.

Also pricing yesterday afternoon was BMW Financial Services’ $1billion auto lease securitization deal. The triple-A rated, A-2 and A-3 tranches priced at 8 basis points over the EDSF benchmark and 18 basis points respectively. The notes were offered with a 1.16 and 1.92 average life maturity.  The triple-A rated class A-4 notes priced at 26 basis points over interest rate swaps. These notes were structured with a 2.34-year average life maturity.

John McElravey, senior analysts at Wells Fargo Securities wrote in a Jan. 16 securitization note that spread are likely to get tighter in 2013

“New auto and FFELP student loan ABS seem to be at tighter pricing spreads based on strong demand,” he said.  “In our opinion, spreads on benchmark AAA autos and credit card ABS should be somewhat insulated from potential spread volatility.”

JP Morgan securitization analysts said in a Jan. 11, ABS report that the spread tightening in January has largely been driven by the positive investor reaction to the resolution of the fiscal cliff.  Investors still show good appetite for higher yielding paper and as a result the bank re-set its 2013 year-end, triple-B spread targets lower to 65bp for prime auto loan.   

“We leave our benchmark AAA auto ABS spread targets unchanged,” said analysts. “Demand for high quality ABS sectors remains solid in both the primary and secondary markets, despite having been outshined by off-the-run ABS thus far in January. In addition, benchmark ABS will continue to offer stability should sovereign risk come back into the headlines.”

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