AmeriCredit, a U.S. auto financier with a USD13 billion loan portfolio, is considering entering interest-rate swaps to convert floating-rate obligations into a fixed-rate liability next month, said Kim Pulliam, senior v.p. in Forth Worth, Texas. The company, which has USD800 million in revenue, is planning to securitize its auto loans next month to the tune of roughly USD1-1.5 billion. While the majority of that deal is likely to be issued in fixed-rate, she said the company may also issue several hundred million dollars of floating-rate debt in the deal, depending on investor demand for floating-rate paper. AmeriCredit would then seek to convert that liability into fixed-rate and pay a spread over six-month LIBOR.
Pulliam said AmeriCredit prefers to keep its debt fixed to match the auto loans it provides to consumers. "If we issue [floating-rate debt] in one, two or three years then we would most likely enter into a swap," she said, adding, "we want everything fixed." The company also has issued money-market eligible floating rate debt but does not tend to convert that, she said.
The terms and underwriters for next month's securitization have not yet been finalized, Pulliam said. AmeriCredit selects derivatives counterparties from among the more than 15 financial institutions it does business with. "If they've got something creative, we're willing to listen," she said.
Moody's Investors Service rates AmeriCredit Ba1 and Standard & Poor's rates it BB minus.
