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Fiat Chrysler’s U.S. Unit Redeems Bonds due 2019

The U.S. unit of carmaker Fiat Chrysler Automobiles (FCA)(FCHA.MI) (FCAU.N) has redeemed senior secured notes that mature in 2019 with a total face value of $2.875 billion, a filing with U.S. market regulator SEC showed, reports Reuters.

The notes, which carry a coupon of 8 percent, were redeemed at a price equal to their principal amount plus the applicable premium and any accrued and unpaid interests, according to the filing.

Fiat completed the buyout of its U.S. unit last year but needs to refinance all of Chrysler’s bonds and past credit agreements before it can gain full access to the unit’s cash. After this payment, FCA still has to repay or refinance Chrysler bonds due in 2021 and renegotiate other credit agreements.

Having full access to Chrysler’s money will help FCA carry out an ambitious five-year investment plan that includes spending 48 billion euros ($55 billion) to 2018 to boost sales by 60 percent to 7 million cars and increase net profit five-fold.

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Hyundai to Sell $1.17B of Bonds Backed by Auto Loans

NEW YORK – Hyundai Motor Co. plans to sell $1.17 billion of bonds backed by auto loans, a person familiar with the transaction told Bloomberg. The person declined to be identified because the terms are private.

Banco Santander SA, Spain’s biggest bank, plans to offer $700.5 million of similar securities, according to a person familiar with that sale.

Asset-backed bonds linked to consumer loans are benefiting from limited issuance and minimal risk of getting hurt by negative news, Bank of America Merrill Lynch analysts said in an Aug. 13 report. Top-rated asset-backed bonds tied to auto loans yield about 62 basis points more than similar-maturity U.S. Treasuries, compared with 81 basis points on Dec. 31, according to Bank of America Merrill Lynch index data.

“The pace of spending over the past few months has exceeded the level of growth in consumer debt sectors,” according to the New York-based analysts led by Chris Flanagan and Theresa O’Neill. “Charge-offs, tighter underwriting standards, and more conservative behavior by consumers have led to historically low, negative growth in revolving debt.”

Sales of debt tied to consumer and business loans are at $63.8 billion, compared with $115.8 billion during the same time frame last year, according to Bank of America.

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