The new-issue market for consumer asset backed securities is kicking off 2014 with two non-prime auto deals, one from Santander and another from American Credit.
Santander filed a registration with the Securities and Exchange Commission this week to issue $1 billion of securities backed by non-prime loans. The deal, dubbed Santander Drive Auto Receivables Trust 2014-1, is being lead by Barclays and Bank of America Merrill Lynch. Citigroup, JP Morgan, RBC Capital Markets and Santanderare co-managers on the class A notes. The structure will also offer class B, C, D and E notes.
American Credit is also expected to begin marketing a $205 million non-prime auto deal next week, according to Standard & Poor’s.
Issuance of subprime auto loan ABS issuance was relatively active in 2013, reaching $21.3 billion as of Dec. 13, according to data from Wells Fargo. That surpassed the $20 billion predicted at the start of 2013 and the $18 billion issued in 2012. Wells Fargo expects to see at least $23 billion of isuance in 2014. By comparison, issuance of ABS backed by prime auto loans last year did not keep pace with 2012, in part because automakers had access to cheap financing in other markets.
Analysts at Well Fargo expect this trend to continue this year. “Auto ABS is likely to tilt more toward subprime loans and prime leases,” they said in the December report.