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Volkswagen AG (VLKAY) is in the market with a $1 billion deal that is eligible for funding under a Federal Reserve program.

The deal, called Vwalt-09, is scheduled to be sold on May 5, the loan application deadline for the Term Asset-Backed Securities Loan Facility, or TALF.

Joint leads for the deal are JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC).

Honda Motor Co. (HMC) and CNH Global NV (CNH) are also shopping TALF-eligible deals.

Honda has a $1.25-billion asset-backed securities deal dubbed Harot 09-2. It is backed by auto loans and is expected to be sold on May 5.

On the largest triple-A rated tranche of $456 million, guidance is in the range of 150 basis points to 155 basis points over a short-term futures benchmark.

The deal is led jointly by JPMorgan and BNP Paribas SA (BNPQY). Co-managers are Barclays PLC (BCS), Credit Suisse Group (CS), HSBC Holdings PLC (HBC), Mitsubishi and Wells Fargo & Co.'s (WFC) Wachovia unit.

In January, Honda sold a $1.3 billion deal, called Harot 2009-1, which wasn't eligible for funding under the Fed's program. That deal, led by Barclays, was the first auto asset-backed securities deal of the year.

Price guidance on CNH's $760.81 million equipment loan-backed deal is expected on Thursday.

Barclays Capital and Credit Suisse are joint leads on that deal, dubbed CNH Equipment Trust 2009-B. Banc of America Securities, BNP Paribas and Royal Bank of Scotland Group PLC (RBS) are co-managers.

Market participants are expecting more deals to be offered before next week's TALF loan-application deadline.

Investors can apply for the third time for non-recourse loans through the central bank's program. These loans can be used to purchase newly created bonds backed by auto, student, credit-card, small business, equipment and floorplan loans as well as residential mortgage servicing advances.

About $12 billion in new bonds backed mainly by auto and credit-card loans that investors could buy using TALF have sold.

Risk premiums on these and other consumer loan bonds have tightened since the program's launch in March. This will eventually lower the cost of borrowing for consumers taking on new loans.

Financial-services company USAA, which sold a $1.125 billion deal that wasn't eligible for TALF, has said it will tap this market again.

Ford Motor Co. (F) has also said it plans to access the TALF program again. Ford Motor Credit, the finance arm of Ford, sold a $2.954-billion deal backed by auto receivables in March. It was one of the first asset-backed deals eligible under TALF to be sold.

Non-TALF issuance stands at about $9 billion so far this year.

-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@dowjones.com