Asset Securitization Report articles from August 2004

Asset Securitization Report archives from August 2004

Whispers.
August 2, 2004... Mark Sun recently started in the auto origination group at JPMorgan Securities. Sun had worked in a similar capacity at Barclays Capital for four years. Prior to that, he was at Salomon Smith Barney. The Alta Group, a firm specializing in...

Under advanced Basel, liquidity is credit enhancement is liquidity.
August 2, 2004... NEW YORK - The U.S. regulator's eligibility criteria for ABCP liquidity may be less of a minefield for arbitrage conduits than previously anticipated, depending largely on the U.S. regulators' implementation of Basel II, according to speakers...

BofA with new auto ABS structure.(asset backed securities)(Bank of America)
August 2, 2004... Fresh off the heels of the second-quarter synthetic auto loan securitization, CARSS Finance 2004-A, Banc of America Securities structured the next step of auto loan ABS, although it's unlikely to be copied by The Street. With the inaugural...

Facelift set for CDO league tables.(Collateralized debt obligations)
August 2, 2004... The criteria for CDO league tables will change this month as Thomson Financial unveils six new tables in its second quarter wrap-up, anticipated this week or next. Not since their inception have CDO league tables garnered such attention and the...

Ratings outlook constant, Fitch says.
August 2, 2004... Despite concerns over rising interest rates and the pervasive threat of another terrorist attack, analysts at Fitch Ratings outlined a broadly favorable view of ABS performance in 2Q04, and are forecasting continued growth in several sectors...

U.S. ABS keeps pace with $10B week.
August 2, 2004... The U.S ABS primary market had another solid week pricing close to $10 billion in new issue as of press time Thursday evening. Real estate ABS made up roughly half of that volume. Meritage Mortgage accounted for $1.12 billion of the real...

Synthetic risk transfer may lose the SPE.(Special purpose entity)(Brief Article)
August 2, 2004... An interesting and unexpected provision included in the Basel II guidelines could effectively nullify previously recognized synthetic risk transfers, if the protection seller is a special purpose entity. Such is the case in the bulk of...

HMFFT 12b-1 fee ABS gets Ambac wrap, broadens buyer base.(Hedged Mutual Fund Fee Trust)(asset backed securities)
August 2, 2004... With the addition of an Ambac wrap, last week's 12b-1 fee securitization from Citibank, N.A. - the sector's only remaining issuer - experienced wider distribution and tighter pricing than any previous mutual fund fee ABS. The $133 million...

Correction.
August 2, 2004... Last week's U.S. market story incorrectly reported that the Nelnet A5 priced outside of the Sallie Mae Student Loan Trust 2004-7 A5 class. On a duration-adjusted basis, the Nelnet A5, with an 11.3-year average life and coupon of 18 basis points...

CLO default and prepayment data - the unified front.(collateralized loan obligation )
August 2, 2004... If you were stranded on a desert island with nothing to do but analyze CLOs, which would you prefer to examine - default risk or prepayment data? The fact is, many investors are too distracted with defaults and recovery data, ignoring the...

FASB reiterates fair value with residuals.(Financial Accounting Standards Board )(Brief Article)
August 2, 2004... At last week's meeting, the Financial Accounting Standards Board reiterated many previously indicated stances to be incorporated into the second exposure draft of the amendment to FAS 140. In a "surprise move" - described as such in an informal...

Lehman not afraid to light up tobacco ABS.
August 2, 2004... Lehman Brothers priced its first transaction backed by tobacco litigation fees stemming from the Master Settlement Agreement last month. Until now, this sector had been the exclusive province of Deutsche Bank Securities. The 8.3-year class...

New mezz investors threaten CLO market's security.(collateralized loan obligation )
August 2, 2004... The continual search for yield across the credit markets has driven new investor groups into Europe's traditionally clubby and private mezzanine market. Larger deal sizes, increased liquidity and an ever-more active secondary market have all...

New CDO league table criteria.(Collateralized Debt Obligations)(Brief Article)
August 2, 2004... Thomson Financial plans to unveil six new CDO league tables this month. They include the following: * Arbitrage CDOs - This is the most inclusive league table designed to capture CDO transactions which have funded assets regardless of the...

IPI wraps second deal.(IP Innovations Financial Services)
August 2, 2004... IP Innovations Financial Services, a guarantor of loans secured by intellectual property, has closed a deal on a $15 million revolving credit facility with Cambridge Display Technology, marking IPI's second transaction. Under the...

Mortgages hit by heavy selling.
August 2, 2004... Mortgages saw active two-way flows last week with strong selling early on, followed by active buying by mid-week on the cheapening and by month-end. On Tuesday, relative value accounts unloaded more than $4 billion, mostly in Fannie Mae 5.5s....

June housing numbers surprisingly high despite increase in rates.
August 2, 2004... Both new home sales and existing home sales for June were surprisingly strong, according to data released last week by the National Association of Realtors (NAR). Analysts said that the figures suggest that while housing demand may moderate...

Upstart DBRS tackles high-cost loans in MBS.(Dominion Bond Rating Service Ltd.)(Mortgage Backed Securities)
August 2, 2004... In response to current predatory lending practices and the varying state laws that have been promulgated regarding the problem, newcomer Dominion Bond Rating Services (DBRS) recently released rating criteria to address these issues. An...

Despite some heavy issuance, there's relative cheapness in CMBS.(commercial mortgage backed securities)(Brief Article)
August 2, 2004... While the CMBS market is projected to hold onto some of the record pace set in the first half of the year, spreads are likely to remain firm. The pace and size of issuance may not allow for much tightening, but the cheapness in the sector...

JPMorgan and Morgan Stanley back in Asia - a smart move?
August 2, 2004... Major players in the ex-Japan Asia securitization business are sending mixed messages. Last month saw the departure of Greg Park from Credit Suisse First Boston; with the bank making no move to replace its head of Asian ABS. Park last week...

Asia roundup: CapitaLand tight pricing a snooze.
August 2, 2004... CapitaMall Trust (CMT), the real estate investment trust established in 2002 by Singaporean property company CapitaLand, has completed its $215 million CMBS deal via HSBC Securities (see last week's ASR). Given both subsidiary and parent...

Looking for Value? Investors turn a keen eye on a deepening European CDO market.(collateralized debt obligations)
August 2, 2004... T hough it's been a long time coming, investors are finally seeing secondary liquidity in European CDOs. According to Standard & Poor's, synthetic transactions continue to be a major driver in the market. Analysts estimated that 92% of...

CDC structures CDS/EDS hybrid CDO.(CDC IXIS Capital Markets S.A.)(Brief Article)
August 2, 2004... The quest for yield opportunity in investment-grade corporate paper has also led to a growing interest in CDOs that reference portfolios of equity default swaps. CDC IXIS Capital Markets is putting together an innovative European CDO that...

European market begins its wind down.
August 2, 2004... The market has not yet plunged into its seasonal slowdown - though it's clearly approaching - as last week's business was more about counting the post-August deals expected to emerge when the market returns from holiday. Analysts at...

Spanish contender for U.K. giant: Santander moves in on Abbey ground.
August 2, 2004... It's still too early in the game to determine what, if any, impact the merger of Abbey National and Santander Central Hispano will have on the U.K. bank's hefty securitization program. Preliminary deal terms, at least, seem unlikely to trip...

Gazprom pumps US$1.25bn of ABS into eager pockets.(asset backed security)
August 2, 2004... Despite scattered apprehensions about the structure, Russia's first future flows securitization was a genuine blowout, sending dealmakers a strong sign that investors are ready for more ABS from the country. Upsized by US$250 million to US$1.25...

Mexican microcredit-lender prices IFC-enhanced deal.(Compartamos)(Brief Article)
August 2, 2004... On July 28, Mexican microcredit-lender Compartamos priced a Ps190 million (US$17 million) transaction with a partial guaranty from the International Finance Corporation. Led by Citigroup unit Acciones y Valores, the five-year deal yielded 160...

Bradesco prices, Nomura & Barclays share Unibanco mandate.(Diversified payment rights)
August 2, 2004... Latin American originators continue to push product in the cross-border market, despite the menace of rising rates. Brazil's Banco Bradesco issued an eight-year US$100 million transaction backed by diversified payment rights (DPRs). Wrapped by...

National Bank of Egypt has DPR deal in the works.(Diversified Payment Rights)(Brief Article)
August 2, 2004... Having worked together on an export receivables transaction for Russia's Gazprom's (see p. 22), Morgan Stanley and Merrill Lynch have their sights on Egypt, according to a source. The banks are said to jointly arranging a transaction for...

PDVSA completes tender offer, leaves US$100M outstanding.(Brief Article)
August 2, 2004... The structured finance vehicle for Petroleos de Venezuela (PDVSA) announced last week that it had completed its buyback offer, repurchasing US$2.51 billion of a total US$2.61 billion. The deal virtually terminates the presence in cross-border...

Whispers.
August 9, 2004... The entire staff of ASR would like to wish Editor Michael Gregory a fond farewell in his future endeavors at United Capital Markets, where he begins Monday. Gregory joined Asset Sales Report as associate editor in 1999 and was promoted to...

DVI recoveries show promise: Triple-A's seen as "cheap" if servicer is successful...
August 9, 2004... Investors holding DVI Inc. medical equipment lease ABS got their first bit of good news in roughly one year last week, as one of the most prominent lease obligors agreed to repay the $60 million it owes the trust. RadNet Management, the primary...

Auto loans down the Mexican pike.
August 9, 2004... At least one auto loan-backed deal is coming down the pike in Mexico, with Scotiabank Inverlat rumored to have the mandate, according to sources. The transaction, a debut for the sector, is unlikely to spur a mad rush in the short term, but a...

ABS exit seen post RSA sale.(Royal & SunAlliance)
August 9, 2004... Royal & SunAlliance (RSA) last week announced the sale of its life insurance business to the privately owned startup company Resolution Life Group. Resolution Life is backed by investors Prudential Insurance, Standard Life and Royal London....

RiviereJenison gets rolling with third ABS mandate.(RiviereJenison Securities)
August 9, 2004... RiviereJenison Securities, a nationwide brokerage and investment banking firm specializing in structured finance, recently placed a $46 million lease receivables ABS in the private Rule 144A market for Des Moines, Iowa-based equipment finance...

Funding is Paramount in new deal.
August 9, 2004... Making its debut in the term ABS market, Paramount Pictures recently priced $210 million in floating-rate notes backed by film royalties via lead manager Merrill Lynch. The privately placed transaction received a Baa2' rating from Moody's...

Single-B HEL classes emerge. Yield-hungry buyers driving trend.(Home Equity Loans)(Basel II)
August 9, 2004... While double-B rated tranches have become a more regular feature of the mortgage ABS landscape in recent months, it is the brave few who look to venture that far down the capital structure. However, some investors may even be ready to take the...

U.S. ABS eases into August.(asset backed securities)
August 9, 2004... The U.S. ABS primary market had a sluggish week with just over $5 billion having priced heading into Friday's session. Business is expected to remain fairly slow throughout traditionally languid August, a reality likely to continue through the...

BellaVista lays groundwork for premier deal.(BellaVista Capital)
August 9, 2004... BellaVista Capital, a real estate finance company in Santa Monica, Calif., has registered with the Securities and Exchange Commission for $1 billion in asset-backed securities, signaling the imminent arrival of a new player in the ABS market....

2Q04 brings U.S. CDO issuance up, improved credit quality.(collateralized debt obligation)
August 9, 2004... The second quarter of 2004 saw a 30% spike in U.S. CDO volume and a smaller number of downgrades compared to years past, noted Moody's Investors Service. The rating agency issued 43 downgrades in the quarter, a sizeable improvement compared...

Observation: Nomura On SEC Comment Letters: Abridged from Nomura Securities commentary by Director Mark Adelson.
August 9, 2004... The SEC received more than 40 comment letters in response to its proposal. In addition, the SEC included a number of older letters in the file. The letters are available on the SEC's website. Two of the oldest letters are arguably the most...

Lackluster trading as MBS market awaits employment data.(Mortgage Backed Securities)
August 9, 2004... MBS trading activity could only be characterized as "lackluster" last week as the market held in range-bound as it waited for last Friday's July employment report. Investor flows were generally two-way, though down in coupon or into 15s was the...

Extension risk on the rise in CMBS.
August 9, 2004... With the currently low interest rates and the increased number of IO loans in CMBS, many market participants have extension risk on their minds. This is somewhat of a "vague" risk, as history may not be a reliable indicator of future extension...

Freddie reports decline in cash-out refis.
August 9, 2004... Freddie Mac recently released its quarterly report on cash-out refinancings. During the second quarter, 39% of Freddie Mac-owned loans were refinanced into new mortgages at least 5 percent higher than the original mortgages. This compares with...

August CMBS pipeline estimated near $8 billion.(Brief Article)
August 9, 2004... The deals are starting to pile up in the CMBS realm after a brief hiatus coming off the record issuance in the second quarter. Three conduit deals seen in July for a total of $4.8 billion were far below the 2004 monthly average of $6 billion...

It's August but deals keep coming.
August 9, 2004... The European market did a good job of breathing some life into the summer pipeline. Last week's flurry of CMBS deals pricing contradicts earlier predictions of a virtual market shutdown. Two U.K.-originated CMBS deals offered investors a...

New Dutch law expected for October.
August 9, 2004... The final steps implementing new Dutch receivables transfer legislation are slated for early October 2004, and market pundits are now questioning how much the long-awaited legislation will actually affect market dynamics going forward. ...

German NPL securitizations becoming a reality.(nonperforming loans)
August 9, 2004... A potential boom of trading nonperforming German loans (NPLs) portfolios is expected going forward, market sources said. Estimates are that German bank balance sheets could hold an estimated 300 billion (US$361 billion) of NPLs - and it's one...

ABS education starts for Mexican universities.(Asset Backed Securities)
August 9, 2004... Standard & Poor's highlighted the potential for Mexican universities to enter the capital markets in a report last week. "Once they're rated, the most probable route to the market will be securitization, either of tuition or student loans,"...

Elite group of micro-lenders tap OPIC, others via CLO.
August 9, 2004... A select group of nine micro-lenders spread throughout seven countries tapped investors last month for a US$38 million transaction touted as the first CLO benefiting this business sector. Swiss consultancy BlueOrchard Finance and U.S. firm...

Argentine deal machine proves unstoppable, Chile drifts.(Tranche)(Collateral)
August 9, 2004... Small but steady, the Argentina deal machine continues to crank out ABS in the consumer and export sectors. Among recent deals closed was Secupyme VI, a US$1.4 million export-backed transaction benefiting wheat farmers. Structured and partially...

A-REIT further highlights appeal of Singaporean CMBS.
August 9, 2004... Issuance last week of a 142.5 million (US$174.8 million) CMBS by Ascendas Real Estate Investment Trust (A-REIT) provided further evidence of a swelling offshore appetite for Singaporean property-backed paper. Arranged jointly by JPMorgan...

Whispers.
August 16, 2004... SG Corporate & Investment Banking has hired five new structured finance professionals for its European fixed-income sales team in London. Dimple Bhawsar joins the derivatives flow group from Dresdner Kleinwort Wasserstein in Frankfurt. Daniel...

Market looks for growth from GECC: Portfolio purchases spur chatter...
August 16, 2004... GE Consumer Finance is poised to become a much larger player in the credit card sector, as it pockets the receivables of two U.S. retailers and stakes out more business overseas, following last week's announced plans to gobble up the credit...

Ofwat sets U.K. water tariffs.
August 16, 2004... U.K. water and sewerage regulator Ofwat announced last week its preliminary price determination regarding how much a British water company is allowed to charge over a five-year review period that begins April 2005. Although Ofwat cut back the...

Chihuahua targets retail in sub deal.
August 16, 2004... The Mexican state of Chihuahua is skimming the excess flows from two outstanding toll-road ABS and doling that risk out to retail investors, apparently the first deal of its kind in the peso market, according to a few sources. Capped at...

Centex beefs up whole-loan activity: Whole loan sales may double...
August 16, 2004... Greenwich Capital entered the ABS primary market last month with a $300 million security backed by originations from Centex Corp. - the first time the Dallas-based home builder has made up the entirety of a principal finance shelf - and it...

U.S. ABS market at typical August pace.
August 16, 2004... Last week marked another slow session in the U.S. ABS primary market, as August rolled on and the Republican National Convention neared. As of Thursday evening, roughly $4.8 billion in new-issue ABS had priced, while close to $2 billion in...

FTN to bring third federal credit union ABS.
August 16, 2004... First Tennessee Capital Markets is getting ready to hit the market with its third auto ABS backed by loans originated and serviced by a federal credit union. The transaction is slated to be the largest such deal to date. First Tennessee is...

CDO methodology invokes reactions.
August 16, 2004... While not carrying the shock value of New Jersey Gov. Jim McGreevey's announcement last week, the fact that some CDOs backed by real estate collateral are pricing sans ratings from Moody's Investors Service has opened up a can of worms about...

MH recovery rates at a record lows.(manufactured house)
August 16, 2004... Recovery rates on manufactured housing ABS bonds have seemingly reached their nadir; moreover, investors in these bonds should expect recoveries to remain at their current low levels throughout the lives of these transactions, according to...

Origen sets example for MH lenders.(Brief Article)
August 16, 2004... Manufactured housing lender Origen Financial, back in the ABS primary market in January after a two-year hiatus, has led the shift toward more conservative loan underwriting practices, something that is evident in the underlying collateral...

Adverse Behavior of U.S. MH ABS Ratings Highlights Challenges.(manufactured housing)
August 16, 2004... By Erkan Erturk, Ph.D., Director, Kelly Luo, Ratings Specialist, Monica Perelmuter, Associate Director, and Mark Risi, Ratings Specialist, Standard & Poor's Ratings Services U.S. manufactured housing ABS ratings experienced significant...

Good buying following FOMC meeting.(Federal Open Market Committee)
August 16, 2004... Last week started off slowly as the market waited for Tuesday's FOMC meeting, but once the statement was out, activity picked up and held steady through the rest of the week. Solid buying was observed from money managers, hedge funds,...

Moody's view on changes in mortgage servicing.
August 16, 2004... A special report on residential mortgage servicers by Moody's Investors Service offered descriptions of how servicers' practices have changed in response to legal and regulatory concerns over the past year. The report, entitled "Trends in...

Convexity hedging less than previously anticipated.(Brief Article)
August 16, 2004... Even with the recent disappointing employment report and the subsequent rate rally, the convexity needs of the mortgage sector have been rather muted, analysts said. UBS said that this could be attributed to market participants adding positive...

Bear Stearns looks at GNMA vs. subprime convergence.(Government National Mortgage Association)
August 16, 2004... With the structural changes that took place in the Ginnie Mae sector since 1990, these securities have started to look more and more like subprime MBS from a credit and prepayment perspective, said analysts. GNMAs have also become a good...

Europe gets slight rest before September takeoff.
August 16, 2004... The European ABS market has finally shifted into summer mode, as the new-issue pipeline last week appeared to have finally reached the customary slowdown. Pricing on the primary and secondary fronts was almost at a standstill. However, it was...

Mexico gathers steam as Sofols, toll roads et al return.
August 16, 2004... The Mexican domestic market is officially back in business, leaving behind a stagnant few months in late spring and early summer. Housing finance company Fincasa made its second visit to the market last week via local investment bank IXE,...

Belize Mortgage succumbs to sovereign downgrade, again.(Brief Article)
August 16, 2004... Prompted by a sovereign downgrade, Moody's Investors Service has again cut the B-tranche of a transaction issued by Belize's Development Finance Corp. in April 2002. Originally at Ba2', the currently US$3.9 million chunk is now B2'. This...

Chinatrust closes first Taiwanese RMBS via Lehman.
August 16, 2004... Chinatrust Commercial Bank, the largest private lender in Taiwan, completed on Tuesday the country's first public RMBS with a NT$5 billion (US$147 million) offering. Lehman Brothers acted as arranger and co-lead managing underwriter, with Fubon...

Merrill embraces LG card and rivals scratch their heads.
August 16, 2004... After an 18-month hiatus, LG Card, Korea's biggest credit card company, will return to the international securitization market in October with a $400 million deal via Merrill Lynch, according to sources. In what seems a curious move,...

Whispers.(various appoinments and notings)
August 23, 2004... The American Bankers Asso- ciation is requesting that the Financial Accounting Standards Board postpone the Sept. 30, 2004 effective date for the EITF 03-1, due to accounting firm Deloitte & Touche's interpretation of its application. In a...

ABS market braces for Republican invasion: Some fleeing, while others hunker down...(Asset Backed Securities)
August 23, 2004... As the end-of-August slump begins engulfing Wall Street, many asset-backed players go on vacation - a seasonal flight that is even more pervasive this year. New York-based investment banks, particularly those in midtown, are bracing for...

Charley leaves ABS unscathed.
August 23, 2004... Damage estimates have hit the $15 to $20 billion range in the wake of Hurricane Charley. Miles of manufactured houses were destroyed, thousands of residents were displaced and businesses caught in the path remained shuttered up at press time,...

Insurance sector shows signs of life.
August 23, 2004... Market sources report that Nomura Securities is structuring its first term offering backed by life settlements, although it is unclear when the transaction might be completed. Nomura has been warehousing life settlements, market sources...

Accredited first subs welcomed by buy-side.
August 23, 2004... Accredited Home Lenders, Inc. priced a $1 billion senior/subordinate deal last week via lead agent Lehman Brothers, marking the home equity lender's largest ABS to date and its first transaction offering yieldier subordinate bonds. ...

US ABS market sees flurry of deals Wachovia strong in autos.
August 23, 2004... The U.S. ABS primary market snapped to attention last week with close to $11 billion priced as of Thursday's market close. Real estate ABS alone was good for roughly $5 billion of the total, as the auto sector also showed strength. Morgan...

New player ECC to securitize adjustable-rate mortgages.(ECC Capital Corp.)
August 23, 2004... Irvine, Calif.-based ECC Capital Corp. has filed with the Securities and Exchange Commission for its initial public offering as a real estate investment trust (REIT). ECC was formed in April for the purpose of building and managing a...

FASB sets sights on 12b-1 fees.(Financial Accounting Standards Board)
August 23, 2004... The Financial Accounting Standards Board staff issued a proposed position Tuesday, dubbed Proposed FSP FAS 140-b, outlining its concerns over whether 12b-1 fees are a sellable asset or a future flow. The Board calls into question the current...

Did you receive one of these?(Letter to the Editor)
August 23, 2004... From: Terry McGraw Sent: Wednesday, July 21, 2004 3:42 PM Subject: Presidential Convention Update for Boston and New York City Employees The McGraw-Hill Companies continues to work closely with city officials and the...

Charley's wrath barely touches CMBS.(Commercial Mortgage Backed Securities)(Brief Article)
August 23, 2004... Although Hurricane Charley wreaked havoc in the Gulf coastal regions of Florida, it has done minimal damage to properties secured in CMBS deals, analysts said. "In general, we find that the CMBS exposure to Hurricane Charley's damag was...

Mortgages see continued support despite increased risks.
August 23, 2004... Mortgages experienced steady two-way flows most of last week, with spreads over the week tighter, despite the neutral to negative bias on the sector and higher risks at current interest rate levels and increased volatility. There was an...

GSE roundup: SEC catches up to Freddie while Fannie portfolio a slow poke.
August 23, 2004... Although the Securities and Exchange Commission (SEC) told Freddie Mac last week that it might bring civil charges against the GSE for its $5 billion earnings restatement, analysts maintain that the firm's shares remain attractive and that...