Is the asset-backed-securities market springing back to life? Potential issuers and investors are crossing their fingers after AmeriCredit Corp. announced Wednesday that it’s pricing a $1 billion offering of automobile receivables-backed securities, mainly consisting of subprime automobile loan contracts.
The securitization, which will be issued in seven classes of notes, “alleviates near-term financing risk and concerns over [AmeriCredit's] ability to access the ABS market,” said Daniel Fannon, an analyst with Jefferies & Co. Inc., according to the Associated Press.
The net proceeds of the deal will be used to provide long-term financing of receivables, the auto financier said. The lead managers on the deal are Credit Suisse, Lehman Brothers, and UBS Investment Bank, and the co-managers are Barclays Capital, Deutsche Bank Securities and Wachovia Securities.
The AP noted that the ABS market has been virtually nonexistent in recent months because of fears that rising delinquencies and defaults in the subprime mortgage market would spread to other markets.
In late August, AmeriCredit CFO Chris Choate told Reuters that his company’s depressed stock price stemmed “guilt by association.”
Last week, the company entered into a $1.5 billion warehouse financing facility, which will replace three existing prime and near-prime facilities totaling $1.45 billion that the company terminated. It has total available warehouse commitments of $5.4 billion, including U.S. facilities of $5.25 billion.