U.S. automobile giant Ford Motor Co. is looking to issue its first securitization in ex-Japan Asia, reliable sources said. Ford Taiwan Services (FTSL) - a wholly owned subsidiary of Ford Credit, the auto financing division of Ford - hopes to raise between $200 million and $250 million via a cross-border auto ABS transaction. Launch is targeted for late this year or early 2007.
Sources say Calyon Securities has won the prized mandate, with the transaction likely to be placed privately. While the bank declined to comment, it would be a logical choice to arrange a cross-border Taiwanese ABS following its involvement on two international mortgage-backed deals by Hsinchu International Bank in the past 12 months.
Given that Moody's Investors Service and Standard & Poor's only rate Ford Credit at the single-B level, the deal will require a monoline wrap to ensure triple-A ratings and tighter pricing. Sources indicate Financial Security Assurance will fulfill the role on FTSL's offering.
To date, FTSL, like most of Ford Credit's Asian subsidiaries, has been heavily reliant on the syndicated loans market for funding. As that market is extremely competitive in terms of pricing, some bankers have questioned FTSL's motivation to securitize.
However, securitization has been a major part of Ford's funding strategy in North America and Europe. While the company may be undergoing a painful domestic restructuring, the Ford name remains one of the world's most recognizable brands.
Name recognition of the borrower has often been an important component of successful Asian offerings. Consequently, Ford would be unlikely to find a shortage of regional investors willing to buy its transactions, particularly those carrying monoline guarantees.
In addition, if the experience of Hsinchu is any guide, cross-border deals from Taiwan are economically attractive. The bank's recent 255 million ($323.3 million) Ambac-wrapped issue priced at 15 basis points over Libor on a 2.39-year average life.
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