Discover boosts credit card-backed bond sale to $750 mil

Discover Financial Services sold $750 million of bonds backed by credit-card payments, according to a person familiar with the offering.

The 3.11-year bonds priced to yield 65 basis points more than the one-month London interbank offered rate, said the person, who declined to be identified because terms aren't public. The sale Riverwoods-based company's sale was increased from $500 million. A basis point is 0.01 percentage point. Thirty-day Libor, a borrowing benchmark, was set today at 0.23 percent.

Nissan Motor Co. plans to sell $500 million in bonds backed by payments from dealers, according to a person familiar with the offering. The top-rated debt is eligible for the Federal Reserve's Term Asset-Backed Securities Loan Facility, said the person.

Discover issued its bonds outside the Fed program as investors increasingly pay cash rather than take out government loans for asset-backed bond purchases, the person said. The credit arm of Dearborn, Michigan-based Ford Motor Co. is also issuing asset-backed debt outside of TALF, according to a person familiar with that offering. Its $1 billion sale is backed by automobile leases.

The central bank began the TALF program in March in a bid to revive credit markets, allowing investors to borrow for purchases of securities backed by consumer, business and commercial-property loans.

Of the $178 billion in consumer asset-backed securities sold in 2009, $105 billion was eligible for TALF, according to Bank of America Corp. Issuance of asset-backed securities tied to household debt plummeted 42 percent in 2008 as the credit crisis sapped demand, Bloomberg data show.

The portion of TALF dedicated to debt backed by consumer and small business loans is to expire March 31.