Feb. 13 (Bloomberg) -- Honda Motor Co., Nissan Motor and Ally Financial Inc. are marketing $3 billion of bonds tied to vehicle debt, according to people familiar with the offerings.
Honda plans to sell $1.25 billion of securities backed by auto loans, and Nissan is issuing $1 billion of similar debt, said the people, who asked not to be identified because terms aren’t set. Ally is offering $750 million of bonds linked to payments from dealerships, a person familiar with that sale said.
Bond offerings connected to automobile sales are dominating asset-backed issuance this year as a strengthening U.S. economy spurs consumers to buy vehicles. Deals linked to car and truck sales account for $10 billion of the $18 billion in 2012 asset- backed issuance, according to data compiled by Bloomberg. Sales of the securities may jump 11 percent to $63 billion this year, accounting for about 55 percent of bonds tied to consumer borrowing, according to Wells Fargo Securities LLC estimates.
The extra yield investors demand to own top-ranked bonds backed by auto loans instead of Treasuries has declined 25 basis points this year to 69 basis points and last week reached 67, the lowest since Aug. 1, according to a Bank of America Merrill Lynch index. A basis point is 0.01 percentage point.
Ford Motor Co. last week sold $2.3 billion of so-called floor-plan debt in its largest offering of the securities since 2005, according to data compiled by Bloomberg. The sale was increased from $1 billion. The deals are backed by dealer payments on loans that finance cars on the lot. The top-ranked portion maturing in 1.92 years priced to yield 47 basis points more than the one-month London interbank offered rate, or Libor.
General Electric Co., the largest U.S. supplier of appliances for new homes, is issuing $400 million in asset- backed bonds linked to inventory loans, a person familiar with that sale said. The Fairfield, Connecticut-based company last issued similar debt in August, Bloomberg data show. The top- ranked portion maturing in three years priced to yield 60 basis points more than Libor.
--Editors: Shannon D. Harrington, Alan Goldstein
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