Continuing its ascension to benchmark status among the captive auto lenders, Nissan Motor Acceptance Corp. priced a retail auto-loan transaction last week at tighter levels than those of one of the Big-Three - it exceeded the levels of Ford's most recent transaction across the board - and priced in line with Chase Auto 2002-A, the tightest auto print of 2002.

Compared to its previous offering this year, spreads are seven to 14 basis points inside of the $1.36 billion 2002-A offering that priced Jan. 10, which at the time was one to three basis points behind Ford's 2002-A deal.

Demand was so strong for the Nissan transaction that the two- and three-year tranches of the deal were oversold before official price guidance was even released; and when guidance was released, they went subject in less than a half hour, sources familiar with the situation reported.

Driving demand was the fact that Nissan recently had its senior unsecured debt ratings raised to investment-grade status by Moody's Investors Service with Standard & Poor's expected to follow suit. This would complete a three-year turnaround for the issuer, who was in full crisis mode in 1998.

The recent rating status was a big selling point during a roadshow the issuer took when it met investors in late March. Currently, Nissan is rated Baa3' by Moody's with a stable outlook and BB+' by S&P, on watch for a possible upgrade.

Analsysts also said that the loss rates which Nissan's recent deals have seen out on the curve have boosted demand. In a March 22 research report, Morgan Stanley points out that, when looking past 18 months of seasoning, losses are better than those of Ford and DaimlerChrysler and approaching those of Honda and Toyota.

Morgan Stanley also notes that the company has corrected the faults of lower loan underwriting standards from the late 1990s, and the fact that Nissan has become a programmatic ABS issuer has improved the credit performance of its loans to a level on par with any of its peers. "With both credit performance and liquidity on par with those of other leading issuers, we believe that the spread concession for Nissan auto loan ABS is no longer warranted," Morgan researcher Susan Berliner writes.

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