The U.S. ABS market got off to a surprisingly fast start last week, with news of Ford Motor Credit and Drive Financial bringing auto loan deals and MBNA America Bank tapping the credit card sector. Things slowed to a snail's crawl by mid-week, however, with an insurance premium loan deal from AIG Credit marketing throughout the week.
Ford got things started with its first auto loan deal of the quarter and third of the year, a $2 billion 2002-C transaction via Barclays Capital and Lehman Brothers jointly. The lead role was just the first auto mandate for Lehman this year and the third for Barclays. Barclays had never led an ABS for Ford and had only recently joined the selling group with its co-managing role in the 2001-E offering.
As has been the case with Ford recently, the structure contained both fixed- and floating-rate tranches, tailored to suit investor demand. This time around, Ford gave buyers a choice on the one-year A2-A and A2-B fixed- and floating-rate classes that totaled roughly $850 million.
Gauging investor demand for recent offerings, which this month saw weakness in both the two- and three-year parts of the curve, Ford directed most of the supply to the one-year class. "It always makes sense to give investors what they want," said David Kimball, securitization manager at Ford.
While Ford does not rival Honda or Toyota where spreads are concerned, 2002-C priced four to six basis points inside of its own March pricing for fixed-rate notes and up to 16 inside 2002-A. This was a relatively small offering for Ford to bring, as its previous two ABS this year total $9.28 billion. To date Ford has sold over $11 billion of auto loan supply, versus $16.4 billion sold in 2001.
Dallas-based subprime lender Drive Financial brought a smaller, $175 million 2002-1 deal via Wachovia Securities, featuring a full MBIA wrap. At levels of 33 basis points cheap to the competing Ford deal, Drive quickly priced its offering. Drive expects to be back in the market after selling more than $300 million of 144A auto ABS in 2001.
MBNA brought $750 million of a three-year fixed-rate credit card deal, driven be continued reverse inquiry interest that has been so prevalent in the sector this year. Barclays and Deutsche Bank Securities were joint lead managers for the sixth triple-A card offering from MBNA.
MBNA cleared at four basis points over swaps for its $750 million three-year triple-A 2002-A6, in line with both Citibank and Bank One, which have each priced three-year fixed deals this quarter at four over.
AIG Credit, in the market with $519 million of five-year commercial insurance premium notes via Salomon Smith Barney, marketed throughout the week, widening offered spreads on senior paper to 23-25 basis points over one-month Libor, from initial guidance in the low 20 area. As of press time the offering had not yet priced, but was expected late in the week.
FEP Receivables Funding continued marketing its mutual fund fee deal via Bear Stearns and Marlin Leasing completed its office equipment lease deal via Deutsche Bank. InterStar Securities was expected to bring a $1 billion Australian mortgage-backed ABS for the coming week.