Dell plots its first asset-backed bond deal

Reuters

By Adam Tempkin

NEW YORK, Feb 14 (IFR) - PC maker Dell is heard to be eyeing the term asset-backed securities market on its own for the first time ever, six years after shedding its long-time funding partnership with CIT group.

The company made the rounds at the recent ABS Vegas industry conference, sources said, trying to gauge investor interest for a possible term deal. The conference was sponsored by the Structured Finance Industry Group (SFIG), a trade organization representing the securitization industry.

A so-called "term" bond deal is for a maturity of at least one year, and possibly much longer. A shorter-term deal would usually be considered "commercial paper".

Dell had a joint venture with CIT for years, and all of its lease originations were owned by that financing company. CIT's equipment lease ABS bond transactions often had up to a third comprised of Dell collateral. These were leases of computers to highly rated obligors, and often had zero losses.

However, Dell bought out CIT's remaining stake in Dell Financial Services in December 2007.

Since then, Dell owns and services all of its equipment-lease assets. When the company brought the assets in-house, it used several multi-seller asset-backed commercial paper private conduits to fund itself. The next step would be to pursue a term ABS deal, sources said.

A spokesman for Dell Financial Services declined comment.

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