The noticeably competitive pricing of three recent Portuguese consumer-loan deals, LTR Finance No. 3, Nova Finance 2 and Chaves Funding (see ASR 10/29/01 and 10/22/01), reflects investors' preference for consumer-loan paper as they look for some pick-up in spreads.
"There's good demand for consumer subordinated tranches - not too subordinated but double-A, single-A," said an analyst at Dresdner Kleinwort Wasserstein.
LTR Finance No.3, a EURO217.7 million (U.S. 191.3 million) deal, was brought to market by Sofinloc, Banco Esfinge and led by BNP Paribas. The transaction, backed by consumer loans, long term rentals and leases is unique in that it features a dual country origination from both Spain and Portugal. Like most Portuguese deals, LTR has a split of principal and interest, which are sold to different entities. The transaction consisted of two tranches of floating-rate notes and one fixed-rate tranche. The triple-A class priced at 33 basis points over three-months Euribor and the single-A class priced at 75 basis points over three-months Euribor, both at the higher-end of price talk.
According to sources, the triple-A tranche, which priced at the same level as the Nova Finance 2 transaction last week, reflects the dual country origination and recent volume of mixed consumer-loan issuance. Nova, another Portuguese consumer-loan transaction for EURO366 million, came to market late last month and priced five basis points tighter than price talk.
Chaves Funding, also a consumer-loan transaction for EURO230 million, preceded both Nova and LTR and also priced competitively.