Honda Motor Co. (HMC, 7267.TO) joins the list of asset-backed bond issuers with a $1 billion bond, according to a person familiar with the matter.

The deal, backed by prime retail auto loans, consists of four tranches, of which the largest triple-A rated portion is for $281 million. Bank of America Merrill Lynch and Credit Suisse are joint leads on the transaction, called HAROT 2011-1.

The asset-backed bond market has been robust with steady issuance so far this year. The securitization market is essential for the flow of smooth credit in the economy and for lowering the cost of borrowing for consumers.

While the auto sector has seen the bulk of new deals this year, following a similar trend from last year, industry participants expect to see more unusual or off-the-run deals this year. Investors are eager for more yield, which is likely in non-traditional or esoteric sectors like receivables from billboard advertising and cell towers.

Fast-food chain operator Church's Chicken is selling a $245 million bond backed by franchise fees and store revenue, the first deal of its sort since the credit crisis. Pricing on the bond is expected later this week.

Other auto-sector issuers this month include Ford Motor Co. (F) with a $586 million and Mercedes-Benz Auto Lease Trust with a $750 million asset-backed bond.

Macquarie Equipment Finance also has a $284.5 million three-tranche bond. Barclays Capital is the lead manager on the bond, which is also expected to price later this week.

-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@dowjones.com