May TALF lineup biggest yet at $9.5 bln supply

NEW YORK May 4 (Reuters) - An upcoming $5 billion credit card ABS deal from Chase Issuance Trust will make the third round of the Federal Reserve's asset-backed loan program its largest, with $9.5 billion of supply in May.

Under the Term Asset-Backed Securities Loan Facility, known as TALF, the Fed makes loans to investors for the purchase of securities. The program was designed to revive consumer lending and reopen the securitization market, nearly shutdown by a credit crisis in 2008.

Since the Fed's program was launched in March, issuers have sold a combined $11.4 billion of new supply, mostly backed by credit cards and auto loans. Investors sought $6.4 billion of TALF financing for the purchase of those securities, while the balance came from cash investors.

"The Chase issue should be a nice benchmark for the sector," said Ross Heller, managing director at NewOak Capital in New York.

Chase's AAA-rated offering includes a 2.9 year maturity and is expected to price about 155 basis points over one-month Libor, market sources said. JPMorgan Securities will be lead underwriter for the offering, the sources said.

Other deals this month include a $760 million equipment loan ABS deal from Case-New Holland (CNH) and a $500 million offering backed by motorcycle loans from Harley-Davidson. In addition, Volkswagen and Honda Auto will issue $1 billion and $1.125 billion of auto ABS, respectively, while GE Credit will offer $1 billion of credit card securities, market sources said.

Market participants said most deals have already met with strong demand and are oversubscribed.

Rising demand for ABS and the additional support provided through the Fed's TALF program has led to a substantial rally in consumer ABS. In April, spreads on AAA securities tightened by 100 basis points, following a 200- to 300-basis points narrowing since the Fed's program was first announced in November. (Editing by Padraic Cassidy)