DFS Discover Financial Services

The consumer loan-backed market is busy.

Securities worth over $3 billion were being marketed on Tuesday, after bonds worth $4.54 billion were offered last week. While some of the deals are eligible for cheap financing under the Federal Reserve's program to boost the securitization market, the bulk of them are not.

Bonds eligible for funds under the Term Asset-Backed Securities Loan Facility, or TALF, include a $500 million fleet lease-backed deal from Automotive Rentals, Inc. and a $750 million floorplan-backed deal from Nissan Motor Co. Ltd. (NSANY, 7201.TO).

The Fed offers investors loans at attractive rates to buy newly created consumer loan-backed securities through TALF. The next loan application deadline for TALF is Feb. 5. The program is scheduled to end in March.

Among the non-TALF deals are a $750 million credit card loan-backed deal from Discover Financial Services (DFS). It was increased in size from an original $500 million.

Dubbed DCENT 2010-A1, it is led by Bank of America Merrill Lynch and Credit Suisse. It sold at 65 basis points over 1-month London Interbank Offered Rate, or Libor.

Another non-TALF deal being marketed this week is a $1.01 billion auto lease-backed bond from Ford Credit Auto Lease Trust. This bond, dubbed FORDL 2010-A, is expected to price later this week.

"There's money earmarked for buying asset-backed securities and investors are using it," said Jim Harrington, a senior portfolio manager at Ryan Labs Asset Management.

In a sign of healthy demand from investors, the Discover deal was done on reverse enquiry, he added.

The sale of bonds without help from the Fed is a sign of health in the asset-backed market, which had suffered as investors stopped buying bonds whose collateral they doubted.

Last week, four non-TALF bonds worth $4.54 billion were on offer. Volkswagen AG (VLKAY, VOW.XE) sold a $1.38 billion auto loan-backed deal, Bank of America Corp. (BAC) sold a $1.496 billion auto loan-backed deal, World Omni Financial Corp. sold a $917 million bond and the state of Missouri had a student loan-backed deal.

Only one bond, a $1.25 billion floorplan-backed deal from Ford Motor Co. (F), sold under TALF's purview this month, making it one of the smallest offerings of so-called "TALF-able" deals.

-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@dowjones.com

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