Tag Archive | "bonds"

Fiat Chrysler’s U.S. Unit Redeems Bonds due 2019

The U.S. unit of carmaker Fiat Chrysler Automobiles has redeemed senior secured notes that mature in 2019 with a total face value of $2.875 billion, a filing with U.S. market regulator SEC showed, reports Reuters.

The notes, which carry a coupon of 8 percent, were redeemed at a price equal to their principal amount plus the applicable premium and any accrued and unpaid interests, according to the filing.

Fiat completed the buyout of its U.S. unit last year but needs to refinance all of Chrysler’s bonds and past credit agreements before it can gain full access to the unit’s cash. After this payment, FCA still has to repay or refinance Chrysler bonds due in 2021 and renegotiate other credit agreements.

Having full access to Chrysler’s money will help FCA carry out an ambitious five-year investment plan that includes spending 48 billion euros ($55 billion) to 2018 to boost sales by 60 percent to 7 million cars and increase net profit five-fold.

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GMAC to Sell $618M of Auto Loan-backed Bonds

GMAC Bank, a unit of Ally Financial Inc., plans to sell 446.5 million euros ($618 million) of securities backed by German auto loans in its first public offering of the debt in Europe.

The top-rated bonds will have an expected average life of 1.6 years, three people told The Detroit News. They declined to be identified before the deal is completed. Deutsche Bank AG and Royal Bank of Scotland Group Plc are managing the transaction.

The securities will be sold through GMAC E-CARAT 2010, a specially created issuing vehicle. The issue will total 507 million euros and two lower-rated portions may be retained, the people said.

European lenders are increasing sales of asset-backed securities as rewards demanded by investors to buy the debt declines. Banks sold a total 13.1 billion euros of asset-backed bonds in September, mostly linked to mortgages and auto loans, in the busiest month since the second half of 2007, according to JPMorgan Chase & Co.

Investors demand about 80 basis points more than the euro interbank offered rate to buy top-rated bonds backed by European auto loans compared with a spread of 135 basis points at the end of 2009, according to JPMorgan Chase & Co data.

GMAC will meet investors next week before opening books on the deal, the people said. Ally Financial sold $584.9 million of bonds backed by loans in August to finance U.S. auto dealer inventories, a person familiar with the transaction told The Detroit News.

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Hyundai to Sell $1.17B of Bonds Backed by Auto Loans

NEW YORK – Hyundai Motor Co. plans to sell $1.17 billion of bonds backed by auto loans, a person familiar with the transaction told Bloomberg. The person declined to be identified because the terms are private.

Banco Santander SA, Spain’s biggest bank, plans to offer $700.5 million of similar securities, according to a person familiar with that sale.

Asset-backed bonds linked to consumer loans are benefiting from limited issuance and minimal risk of getting hurt by negative news, Bank of America Merrill Lynch analysts said in an Aug. 13 report. Top-rated asset-backed bonds tied to auto loans yield about 62 basis points more than similar-maturity U.S. Treasuries, compared with 81 basis points on Dec. 31, according to Bank of America Merrill Lynch index data.

“The pace of spending over the past few months has exceeded the level of growth in consumer debt sectors,” according to the New York-based analysts led by Chris Flanagan and Theresa O’Neill. “Charge-offs, tighter underwriting standards, and more conservative behavior by consumers have led to historically low, negative growth in revolving debt.”

Sales of debt tied to consumer and business loans are at $63.8 billion, compared with $115.8 billion during the same time frame last year, according to Bank of America.

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