Eight billion dollars of asset-backed securities came to market last week - including a $1.48 billion issue by Chase Manhattan Corp. backed by auto loans.
The Chase deal is part of a trend: Lenders are shifting securitization of auto loans into a higher gear.
Though they represent only 8.7% of the asset-backed total through Sept. 5, auto-loan issues are up 14.3% from last year, according to a report by Prudential Securities.
The rise came as card-backed issuance slipped 9.4% and home-equity- backed 8.7%. Banks have issued $104 billion in asset-backed securities so far this year, putting the industry on a pace to eclipse 1995's record volume of $119 billion.
The rise in auto-loan issues "seems like catch-up to me," said Anand Bhattacharya, analyst at Prudential Securities. "There's a fairly decent demand overseas" for such securities, he noted "and there hasn't been much growth in any other area."
Chase's securities won triple-A ratings from Moody's Investors Service and Standard & Poor's. Not every portfolio is viewed so positively, however. Several recent auto loan offerings have been burdened by uncertainties caused by high numbers of consumer bankruptcies, said Moody's analyst John Speacks.
He called the Chase offering "a good one," because the bank usually offers loans to wealthier car buyers who aren't likely to default.