Ally Financial Inc. (ALLY:US) sold $731 million of bonds linked to automobile debt, 79 percent more than it had planned, amid a surge in asset-backed bond issuance.
The lender (ALLY:US) paid 70 basis points more than the benchmark swap rate on a top-ranked slice maturing in 2.89 years, according to a person familiar with the offering who asked not to be identified because terms aren’t public. The transaction, backed by loans to dealerships, was initially marketed at $409.5 million, the person said.
Ally’s deal is part of about $6 billion in securities tied to household and business borrowings being offered to investors this week as rising vehicle sales fuel issuance, according to data compiled by Bloomberg. Citigroup Inc. boosted its 2012 asset-backed forecast by about 50 percent to $183 billion last week, with sales linked to autos accounting for about 63 percent of that, analysts led by Mary Kane said in a July 12 report.
U.S. auto sales for June beat analysts’ estimates, accelerating to a 14.1 million seasonally adjusted annualized rate, researcher Autodata Corp. said in a July 3 statement. The pace exceeded the average 13.8 million light-vehicle estimate of 15 analysts surveyed by Bloomberg.
Ford Motor Co. (F:US) yesterday boosted its sale of bonds backed by auto loans to consumers to $1.6 billion from $1 billion, a person familiar with that sale said. The Dearborn, Michigan- based automaker paid 19 basis points more than the benchmark swap rate on top-ranked securities maturing in 3.39 years. A basis point is 0.01 percentage point.
Investors are lured to asset-backed bonds by short durations and stable relative yields. Top-ranked securities tied to auto debt are yielding 46 basis points more than Treasuries, about the narrowest this year, according to a Bank of America Merrill Lynch index.
“The safe haven status of ABS will continue to be its best quality,” Deutsche Bank analysts led by Harris Trifon said in a report today.
To contact the reporter on this story: Sarah Mulholland in New York at email@example.com
To contact the editor responsible for this story: Alan Goldstein at firstname.lastname@example.org