Lloyds Banking Group is to sell bonds backed
by Black Horse Motor Finance loans, in the latest sign that UK
retail motor paper may be seen as a strong asset by capital
markets.
The bank has put together some 130,000 hire
purchase contracts, worth some £768 million, to back bonds intended
for sale.
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On offer, but not yet priced or trading, are
£284 million in triple-A rated sterling-denominated bonds and €284
million in triple-A rated euro-denominated bonds.
An unrated tranche of £199 million is to be
retained by LBG.
While the Black Horse bonds are backed by
relatively mature loans and thus represent a relatively short term
investment of 10 months, if they are received well it will be a
sign that markets feel confident about the credit strength of
consumer motor borrowing in the near future.
Meanwhile, FirstRand, the South African owner
of Carlyle Finance, has priced £246 million worth of triple-A-rated
bonds backed by Carlyle paper, paying 185 basis points over
one-month sterling Libor.
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By GlobalDataBonds backed by UK consumer motor loans have
not been traded on the capital markets for many years – the fact
that both FirstRand and LBG have made such moves within a short
space of time begs the question of who will be next to issue.
For a full analysis of the Carlyle and
Black Horse bonds, and the outlook for further trading, see
February’s edition of Motor Finance.
