DFS Discover Financial Services

Ocwen Advance Receivables is the latest issuer with a bond eligible for funding under a Federal Reserve program.

Investors can buy Ocwen's $200 million servicer advance-backed bond, using cheap nonrecourse loans through the central bank's Term Asset-Backed Securities Loan Facility, or TALF. The next loan application deadline for TALF is Feb. 5.

Having a healthy asset-backed market is important as it eases the flow of credit and helps lower the cost of borrowing for consumers. Issuers can package loans backed by auto or student loans and credit card debt and sell them to investors. When buyers grew wary of such collateral, they withdrew from this market and the central bank had to step in with TALF.

On Wednesday, two bonds eligible under TALF emerged: Cabela's Inc. (CAB) has a $300 million credit card loan-backed deal and Navistar International Corp. (NAV) has a $200 million equipment floorplan-backed bond.

The consumer loan-backed portion of TALF, scheduled to end in March, was set up last year to draw investors to buy newly created asset-backed securities. More than $100 billion in securities eligible for TALF have been sold since its launch. Issuers initially used the TALF crutch to sell their bonds but, by November, the volume of non-TALF deals sold was higher than TALF deals. In August, 95% of asset-backed securities sold were eligible for TALF. By November, that figure was down to 32%.

Other TALF-eligible deals being marketed ahead of this monthly deadline include a a $900 million floorplan-backed deal from Nissan Motor Co. (NSANY, 7201.TO) and a $500 million fleet lease-backed deal from Automotive Rentals Inc.

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. Another non-TALF deal being marketed this week is a $1.01 billion auto lease-backed bond from Ford Credit Auto Lease.

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.

The sale of non-TALF bonds shows this market is likely ready to operate without the Fed's support.

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

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