World Omni Prices Tight Amid Fed Hike


Though out of the game since last November, World Omni Financial Corp. re-emerged last week, issuing $1.2 billion in auto loan-backed bonds.

The deal, managed by Merrill Lynch & Co., and backed by Chase Securities Inc., Banc of America Securities, First Union Capital Markets and Credit Suisse First Boston, was structured in four triple-A rated tranches.

"We felt that it went very well, extremely well, considering the volatility of the market place," said Tucker Allen, vice president and corporate treasurer of World Omni, who was referring to the looming Federal Reserve rate hikes. "We were able to bring in the price from original price talks. We think there was a lot of appetite for the longer tranches." The A-4 three-year class priced at 35 basis points above one-month Libor.

"We don't do them that often," he added. "We're pretty much once a year unless volume warrants it."

Since 1994, World Omni, a subsidiary of JM Family Enterprises, has done eight scattered ABS deals, totaling roughly $7.2 billion in bond sales. World Omni's last November issuance tallied $1.7 billion, and was managed by Merrill Lynch. The deal prior, falling in November of 1997, was managed by Credit Suisse First Boston and totaled $1.1 billion.

According to Allen, World Omni traditionally aims to issue in the fall. However, he explained, "We did it early this year to beat the herd. We wanted to beat the Y2K contingency."

As for future deals, it's auto-backed, said Allen, with an accent on dealer floor plans. "We're doing more [of those] loans this year than in the past couple years," he explained. "I anticipate doing a owner trust securitization, with underlying assets being auto dealer loans."