American Express Co. is offering $1 billion of credit card-backed securities eligible for funding under a Federal Reserve program, according to a person familiar with the matter.
Underwriters are aiming to price the bonds to yield about 140 basis points over the one-month London interbank offered rate.
Nissan Motor Co. is also in the market with a $1.024 billion auto loan-backed deal that is eligible for funding under the program. It is due to price Sept. 2, a day ahead of the next loan application deadline for the Fed's Term Asset-Backed Securities Loan Facility, through which investors can procure cheap loans to buy newly created consumer loan-backed and new and existing commercial mortgage-backed bonds.
On Wednesday, Bank of America Corp. offered a $1.995 billion auto loan-backed deal, eligible for Talf, according to a person familiar with the matter.
Last month B of A sold a $3.993 billion auto loan-backed deal at 135 basis points over a benchmark. That was the B of A's first deal eligible under Talf.
The program was set up in March to revitalize the securitization market.
Initially targeted at securities backed by consumer loans, it was expanded to include bonds backed by commercial mortgages. The program was set to expire Dec. 31, but last week the central bank and the Treasury Department extended their support, citing "impaired" conditions in financial markets. Talf loans against newly issued asset-backed securities and existing commercial mortgage-backed securities will be extended through March 31. For newly issued CMBS, which take a significant amount of time to put together, the extension is until June 30.
Since the launch of the program, $85.45 billion in consumer loan-backed deals have been sold, the bulk of them using nonrecourse loans at attractive rates from the Fed.
Talf has also revived investors' appetite: Recently, asset-backed deals have been increased to as much as $5 billion as investors took advantage of the Fed's cheap loans. That's reminiscent of the precrisis days, when deals were regularly increased in size to the $6 billion to $10 billion range.
The next loan application deadline for the ABS portion of the program is Sept. 3. For CMBS the deadline is Sept. 17.