Nissan Tops Honda in Biggest Asset-Backed Bond Sale Since 2005

Nissan Motor Co. sold $1.54 billion at lower relative yields than Honda Motor Co. in the automaker’s largest issue of debt backed by auto loans since 2005.

The automaker paid 15 basis points more than the benchmark swap rate on $514 million of top-ranked securities maturing in about two years, according to a person familiar with the transaction, who declined to be identified because terms aren’t public. Investors demanded 18 basis points on similar debt sold by Honda yesterday, a person familiar with that sale said.

Automakers are boosting asset-backed sales as investors seek bonds tied to vehicle lending. Nissan increased its sale from $1 billion, while Honda’s $1.69 billion sale was raised by $440 million. Ford Motor Co. last week sold $2.3 billion of so-called floor-plan debt, tied to inventory loans to dealers, in its largest offering of the securities since 2005, according to data compiled by Bloomberg. The issue was increased from $1 billion.

“There is very strong demand for and a general lack of supply of higher-quality, lower-risk assets,” said John McElravey, an asset-backed analyst at Wells Fargo & Co. “Auto ABS fits this category well.”

Bond offerings connected to automobile sales are dominating asset-backed sales this year. Deals linked to car and truck sales accounted for $10 billion of the $18 billion in 2012 asset-backed issuance before this week’s sales, according to data compiled by Bloomberg.

Sales of the securities may jump 11 percent to about $63 billion this year, accounting for about 55 percent of bonds tied to consumer borrowing, according to Wells Fargo estimates.

Nissan sold $1.54 billion of asset-backed securities linked to auto loans in January 2005, Bloomberg data show.

The extra yield investors demand to own top-ranked bonds backed by auto loans instead of Treasuries has declined 26 basis points this year to 68 basis points and last week reached 67, the lowest since August, according to a Bank of America Merrill Lynch index. A basis point is 0.01 percentage point.