Bloomberg News

CarMax Boosting Asset-Backed Transaction to $940 Million

June 06, 2012

CarMax Inc. (KMX:US) boosted its sale of bonds backed by auto loans to $940 million from $750 million as investors snap up the debt with delinquencies at the lowest level this year.

A top-ranked slice maturing in 3.78 years will yield 36 basis points more than the benchmark swap rate, according to a person familiar with the offering who declined to be identified because terms aren’t public. The Richmond, Virginia-based used- vehicle retailer paid 48 basis points more than the benchmark on similar debt sold in February, according to data compiled by Bloomberg.

U.S. households are staying current on car payments even as concerns mount that economic growth is slowing. Delinquencies on auto loans packaged into bonds dropped to the lowest level this year in April, New York and London-based Fitch Ratings said in a May 31 report.

Payments more than 60 days late from borrowers with the best credit fell 5.7 percent to 0.33 percent last month, Fitch said in a report today. Losses on the debt slid 50 percent to 0.17 percent, according to the rating company.

Top-ranked debt backed by auto loans yielded 61 basis points more than Treasuries yesterday, up from 59 basis points on April 30, according to a Bank of America Merrill Lynch index. A basis point is 0.01 percentage point.

Spreads on consumer asset-backed securities have been stable even as the European debt crisis roils markets, Wells Fargo & Co. analysts said in a report last week.

“Our expectation is for various segments of consumer ABS to outperform in the event of increased market turmoil related to the situation in Europe or other macroeconomic events,” wrote the analysts led by John McElravey, who is based in Charlotte, North Carolina.

To contact the reporter on this story: Sarah Mulholland in New York at

To contact the editor responsible for this story: Alan Goldstein at

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