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ALD France hopes to squeeze in last deal before Global ABS

Sign of the Societe Generale at the entrance of the head office of the french banking group in La Defense business district.

Société Générale subsidiary follows pair of preplaced deals in quiet conference build-up

The European ABS primary market is likely to remain quiet in the run-up to the Global ABS conference, to be held next week in Barcelona, with only one issuer publicly marketing a deal.

Société Générale's majority-owned car leasing subsidiary ALD France is out with a deal called Red & Black Auto Lease France 2.

It follows two preplaced deals. On Friday, there was a strong reception from investors for €800m of notes backed by Spanish car loans originated by BBVA.

Then on Monday, debut UK issuer Capital on Tap sold five tranches of a £259m credit card securitization.

Red & Black is likely to be the last publicly marketed deal priced before Global ABS.

“I will be quite surprised if someone comes now with an intra-week deal,” a bank analyst said. “There might be some more mandates, with roadshows taking place in Barcelona and pricing the week after that.”

The Red & Black shelf is well known, but this is only the second instalment of the French version. It differs from the first in that it contains some residual value risk, which means it is not repo-eligible for the European Central Bank.

“There is a smaller investor base for deals with residual value risk,” said the analyst.

However, he said he expected the deal to get done successfully this week, even if there might not be “runaway demand”.

The success of BBVA’s deal should encourage Société Générale, arranger of the Red & Black deal, and lead manager RBC Capital Markets, that there is demand for euro car loan deals.

BBVA Consumer Auto 2023-1 “was quite a strong transaction,” the analyst added. “I think the issuer is probably quite happy.”

Six tranches, ‘A’ to ‘E’ and ‘Z’, were sold, with the seniors priced at 65bp over three month Euribor.

Meanwhile, Capital on Tap raised £88m with a deal backed by £259m of assets. It offers corporate credit cards to small businesses for their employees to borrow for their expenses.

The class ‘A’ tranche, structured as a loan note, was rated Aa3/AAA by Moody's and DBRS. It was not offered, but the mezzanine tranches ‘B’ to ‘F’ were all placed.

The bank analyst said it made sense not to risk publicly marketing the deal. “It’s a debut issuer, it’s credit cards and on top of that it’s credit cards to SMEs,” he explained.

Credit cards are likely to be a tricky asset class in Europe this year: Fitch recently predicted mild to moderate deterioration in asset quality.