Harley-Davidson has rolled out a new $605 million debt deal backed by loans to buyers of its iconic motorcycles, as the 10-day annual bike rally roars through Sturgis, South Dakota.
The world’s largest motorcycle rally has been shaping up to be the busiest in years, despite the recent surge in COVID-19 cases due to the more contagious delta variant, which has been hitting unvaccinated people the hardest.
The four-tranche Harley HOG, -0.23% bond deal packages up more than 30,000 motorcycle loans to borrowers paying an average rate of interest of 7.36% on about $20,000 of debt each, according to a Fitch Ratings presale report.
In keeping with the hunt for yield, the bonds are expected to offer investors only a modest premium above a risk-free benchmark when they price later this week.
Specifically, price talk on Harley’s large $225 million A-2 class of AAA-rated bonds was circulated Monday in a range of 12 basis points to 14 basis points above a fixed-rate benchmark, according to a source with direct knowledge of the dealings.
Spreads are the level bond that investors earn above a risk-free benchmark to help compensate for default risk. Those levels have sharply declined this year for most bonds backed by U.S. consumer debt, even as households have gotten more comfortable spending — and using credit for purchases.
Spreads on consumer asset-backed bonds (ABS), from credit cards to subprime auto loans to student debt, have dwindled this year.
Read the full story here: https://www.marketwatch.com/story/with-sturgis-rally-underway-harley-davidson-rolls-out-600-million-debt-deal-11628555104?reflink=mw_share_facebook&fbclid=IwAR1akD9XOjH9iK1duK2rHZNszX4CMfSMxnAvLLdSa9gN7MFmTSzFk8KQ6M0