Citigroup Inc. has sold a $1.5 billion credit card loan-backed deal that is eligible for funding under a Federal Reserve program, according to a person familiar with the matter.
The single-tranche, 4.94-year bond was the latest to emerge ahead of today's loan application deadline for the Term Asset-Backed Securities Loan Facility, or Talf. It is also the largest Talf-eligible deal to surface this month.
The bond was launched at 255 basis points over a benchmark, in line with guidance.
So far, about $4 billion in Talf-eligible deals have emerged ahead of the monthly loan application deadline for the Fed's cheap funds to buy newly created asset-backed bonds. Last month, Talf-eligible deals worth about $6 billion were sold.
For the first time, in November, the volume of deals not eligible for Talf exceeded the amount of bonds investors could buy using the Fed's loans. This was seen as a sign of strength in the asset-backed market, which became paralyzed after the September 2008 collapse of Lehman Bros. as investors grew wary of bonds whose underlying collateral they were unsure about.
Talf has bolstered the market, and many issuers are no longer leaning on the program. More than $90 billion in deals eligible for cheap financing under Talf have been issued since March, when the program was introduced.
"Talf has been tremendously successful, and now very few want to use it," said Dan Nigro, a portfolio manager at Dynamic Credit Partners in New York.
On Tuesday, Hyundai Floorplan Master Owner Trust sold a $200 million Talf-eligible deal led by Barclays Capital.
Other issuers include SLM Corp., better known as Sallie Mae. Price guidance is out on Sallie's $589 million deal, according to a term sheet.
Joint leads on Sallie's deal are Deutsche Bank and JPMorgan Chase & Co. Price guidance on the largest AAA-rated tranche, worth $391.2 million, is roughly 10% to 12% more than a benchmark.
