Asset Securitization Report articles from August 2006

Asset Securitization Report archives from August 2006

Whispers.
August 7, 2006... Mark Nicolaides started at Latham & Watkins last Monday after ending a 20-year career at Mayer Brown Rowe & Maw last May. Nicolades joins the firm as a partner in the finance department, and is expected to boost the firm's presence in the...

Market agrees on projected slowing rate of HPA.(home price appreciation )
August 7, 2006... One-by-one various market players have come forward in recent weeks with predictions of slowing - in some cases negative - home price appreciation (HPA) in coming quarters. While actual HPA information varies depending on the source, and...

Brawl over Basel II threatens timeline.
August 7, 2006... It took nearly seven years for the banking industry to hash out proposed revisions to the Basel Capital Accord and get the Federal Reserve to approve them. Now, while the industry awaits approval from the three other federal banking regulators,...

Freddie Mac says yes to cap.
August 7, 2006... Freddie Mac announced on Tuesday that it has agreed to limit the size of its $722.2 billion mortgage portfolio. Under the agreement - which was voluntarily accepted by the GSE after being pressured by its regulator the Office of Federal Housing...

Could HG ABS CDO modeling: use a tuneup?(asset backed securities)(collateralized debt obligations)
August 7, 2006... Cash flow models may not be keeping up with the rapidly growing and transforming high-grade ABS CDO sector, according to a report released last week by Deutsche Bank analysts. The U.S. high-grade ABS CDO sector has grown exponentially in recent...

Dealer floorplan, utility transition deals make ABS issuance week interesting.(asset backed securities)
August 7, 2006... Investor demand might not have forced issuers to bring a lot of deals to the ABS market last week, as new pricings totaled just $11 billion. Traders and other market professionals, however, said the deals' warm reception kept spreads reigned in...

CDO CDS speads trending tight to cash.(collateralized debt obligations)(credit default swap)
August 7, 2006... The release of standard documentation for trading CDO credit default swaps in early June was a major step toward transforming what has historically been a long-only market - and in the weeks following, the sector seems to be chugging along. ...

Value to be found in U.S. CLO equity.(Collateralized loan obligations)
August 7, 2006... Recent leveraged loan spread widening could be a boon to new-issue CLO investors - as long as the widening is in fact due to market technicals. Bear Stearns analysts said as much last week, pointing out that widening in leveraged loan spreads...

Senate committee promotes rating agency reform.
August 7, 2006... The Senate Banking Committee last Wednesday passed a version of legislation that aims to give the Securities and Exchange Commission explicit authority to regulate credit rating agencies. The Credit Rating Agency Reform Act of 2006, aims to...

Carlyle closes eighth CLO - CHYP VIII.(collateralized loan obligations)
August 7, 2006... As pricing finally begins to rise on institutional loans, CLO managers are frenetically scrambling to issue larger funds in order to invest in and take advantage of these juicier spreads. Jumping on board with one such new fund is The Carlyle...

NYLIM closes flatiron CLO 2006.(New York Life Investment Management)(collateralized loan obligations)(Brief article)
August 7, 2006... New York Life Investment Management (NYLIM) announced last week that it closed a $618 million collateralized loan obligation, NYLIM Flatiron CLO 2006. The new CLO, underwritten by Citigroup, and managed by NYLIM's fixed income investors group,...

Attentus second CDO to come to market via JPMorgan.(Collateralized debt obligations)(Brief article)
August 7, 2006... JPMorgan Securities is preparing to bring to the market this month the second CDO backed by Attentus Management Group. The $512 million Attentus CDO II will be backed by a mix of trust preferred securities, secured loans and subordinated debt...

Fitch looks at synthetic CDO rating stability.
August 7, 2006... Fitch Ratings announced on Aug. 2 the launch of Stability Scores for synthetic CDOs. The scores indicate the propensity of a tranche to retain its original rating over a period of one year from closing, thus providing a better understanding of...

Kerzner seeks $575m loan deal to supplement CMBS.(commercial mortgage-backed security)(Brief article)
August 7, 2006... After securing a $2.8 billion CMBS deal to support their $3.18 billion acquisition of Kerzner International, private equity firms Providence Equity Partners and Colony Capital have teamed up with bank duo Credit Suisse and Deutsche Bank to...

Sanders ends MBS and high-grade biz.(Sanders Morris Harris Group)(Brief article)
August 7, 2006... Sanders Morris Harris Group announced on July 28 its plans to close its high-grade corporate bond and mortgage-backed agency businesses. This announcement comes just more than eight months after the establishment of the New York group, which...

More markets accessing CTLs: But CTL investment levels lightened up by private buysiders.(credit tenant lease)
August 7, 2006... The publishers behind the Denver Post and the Rocky Mountain News locked up a credit tenant lease-backed offering in the private placement market last week. The $81 million deal added some needed diversity to a market competing against CMBS for...

Fannie Mae's portfolio shrinks in June.
August 7, 2006... The month of June brought declines for Fannie Mae, as it reported a decrease in retained portfolio holdings by $2.9 billion - its first dip since February. The portfolio contracted at a 4.6% annual rate to $730.9 billion. The GSE also agreed to...

JPMorgan, Barclays examine 40-year mortgages in RMBS.(Residential Mortgage-Backed Securities )
August 7, 2006... Forty-year fixed rate mortgages have recently hit the market as another option for borrowers looking for payment savings, but how effective are they? A recent report from JPMorgan Securities set out to answer this question by looking at...

More weakness seen in credit card sector.
August 7, 2006... Analysts at Standard & Poor's say they expect to see more from the credit card sector during the second half of 2006. However, the continued deterioration within existing card deals is starting to exert pressure on ratings. Lackluster new...

Draft regulations provide more clarity to U.K. tax issues.
August 7, 2006... The U.K. HM Revenue & Customs has issued draft regulations that will provide a new tax regime for securitization companies. The new regulations are expected to clarify certain provisions of the International Financial Reporting Standards (IFRS)...

Packed July pipeline flows into August issuance calendar.
August 7, 2006... After the deluge of deals to hit the market in July, the pace finally looks set to let up just in time for a traditional summer slowdown. But before the lull begins, there still remain some busy days of pricing. Last week, pricing activity was...

Italian servicers express readiness for subprime deal flow.
August 7, 2006... The establishment of the Italian NPL market has spurred the growth of a subprime borrower base in the country. And ABS market participants are ready for the challenge. In fact, Italian servicers said that they are prepared to take on the task...

Brazil's Dedini-Dulcini preps sugar future flow FIDC.(Dedini-Dulcini Agroindustrial)
August 7, 2006... A Brazilian receivable investment fund (FIDC) backed by future contracts to supply sugar and liquid sugar is set to launch later this month, according to a source close the deal. The originator is Dedini-Dulcini Agroindustrial, and the size is...

Mexico's Grupo TMM seeks OK for $200m asset-backed loan.(Brief article)
August 7, 2006... Latin America's largest transport and logistics company, Grupo TMM, plans to redeem a 2007 secured bond with a $200 million asset-backed loan from Deutsche Bank, according to a company press release. "The assets backing the loans will be...

Genworth provides first foreign insurance in primary Mexican RMBS.
August 7, 2006... Last week, Genworth Financial became the first foreign mortgage insurer to enhance an RMBS in Mexico in the primary market by providing insurance that covered up to 25% of the principal and accrued interest of the most recent deal from...

Whispers.(Manfred Schepers)( Richard Bianchi )(David Spector)
August 14, 2006... Paul Weiss Rifkind Wharton & Garrison has hired Robert Zochowski from Shearman & Sterling for its New York office. Weiss's practice focuses on complex structured finance and securitization deals, specifically films, patent royalties and energy....

Russian Standard leads spillover of consumer finance boom into ABS.(Statistical data)
August 14, 2006... Oil and gas aren't the only gushers in Russia these days. Structured finance is bubbling forth like a hot new energy source, with HVB forecasting that the country will crank out $2.5 billion in ABS and MBS this year, a booming business that was...

FICOs dip, 40-year mortgages rise.
August 14, 2006... Despite the predominant prediction of slowing subprime mortgage volume this year, the sector reached near-record issuance levels in the second quarter. Subprime issuance to the secondary market amounted to $127 billion, up from $114.3 in the...

Eurotunnel lender talks stalled.
August 14, 2006... Eurotunnel has been locked in restructuring talks with its creditors over the past few months, trying to reach a compromise solution that is acceptable to its various creditors. On Aug. 2, the Paris courts placed the company on safeguard...

Fitch adds three to its ABS group.(asset backed securities)(Les Scharfstein)(David Petu )(Kevin Corrigan)
August 14, 2006... Fitch Ratings has added three new members to its growing ABS group, Les Scharfstein, David Petu and Kevin Corrigan. "Each brings a wealth of securitization experience and industry-wide recognition to our already well-seasoned team," said Kevin...

SEC clarifies Reg AB provisions.(Securities and Exchange Commission )(Brief article)
August 14, 2006... Last week the Securities and Exchange Commission released clarifying guidance on Regulation AB -Item 1122, Compliance with applicable servicing criteria. Early in April, representatives from the big four accounting firms as well as officials...

August absences clamp down on ABS production.(asset backed securities)
August 14, 2006... For several weeks now, the asset securitization market has been able to sustain moderate production volumes in the face of the usual summer slowdown. Last week, however, the market showed significant signs of losing steam. By press time,...

Performance outlook rosy as the MM CLO sector matures.
August 14, 2006... The middle market CLO sector has seen a rash of rating agency upgrades this year. And while credit quality is expected to remain strong despite new managers and collateral choices, the rosy performance can be attributed largely to structural...

Principia launches automated structured finance compliance reporting product.(Principia Partners)
August 14, 2006... London-based Principia Partners, which provides data processing solutions for structured finance and capital markets companies, launched a product that will help structured finance entities handle compliance reporting and accounting. The...

Commodity issuances, scarce investor presence crowd out Jersey Central deal.(Brief article)
August 14, 2006... At $182.4 million, the Jersey Central Power & Light stranded cost transaction was not expected to make an enormous splash on the ABS primary issuance market last week. Still, it attracted attention from some traders simply because of the...

Fitch seeks feedback from market on S.M.A.R.T Stamp system.
August 14, 2006... Fitch Ratings is asking investors for a little feedback. On Aug. 3, the rating agency rolled out a plan to add surveillance, metrics, analytics, research and tools to its ratings of structured finance deals on a monthly or quarterly basis. The...

Morgan Stanley is latest buyer in mortgage industry.(acquired Saxon Capital Inc.)
August 14, 2006... Morgan Stanley has joined the growing list of investment banks making major investments in their mortgage securitization businesses by buying originators, servicers, or both. On Wednesday the New York company said it had agreed to buy Saxon...

New pension law may retire ERISA issues for securitizations.(Employee Retirement Income Security Act)
August 14, 2006... Background Much of the available investment capital available globally is held by pension plans, and much of the plan capital comes from employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). ERISA...

FOMC pause fuels buying in mortgage-backed paper.(Federal Open Market Committee )
August 14, 2006... Since Federal Reserve Chairman Ben Bernanke spoke in mid-July to Congress, mortgages have performed very well on expectations that the Fed would likely pause in August. Further supporting this view was economic data that provided the Federal...

Shorter June collection calendar lowers July mortgage prepayments.
August 14, 2006... As expected, prepayments slowed in July primarily due to a lower number of collection days - 20 versus 22 days in June. In general, FNMA speeds were anticipated to slow around 10% in 4.5s and 5s, and 12% to 13% in higher coupons. Speeds...

JPMorgan says MBS investors should move up to 6.5s.(mortgage backed securities)
August 14, 2006... In a recent report, JPMorgan Securities analysts suggested that investors move up to 6.5s. They noted that the mortgage spread tightening has really not been equally distributed across the coupon stack, adding that lower coupons have been the...

Prepayments to rise in September report.(Brief article)
August 14, 2006... Prepayment speeds are expected to increase around 10% or more in August as the higher day count - 23 days versus 20 days in July - partially offsets a modest decline on average in July refinancing activity. JPMorgan Securities analysts estimate...

Moody's runs parallel ratings study for European issues.
August 14, 2006... Moody's Investors Service published a smaller European version of its U.S. ratings comparison study and found that the pattern of rating differentials for international jointly rated structured finance securities - deals that are rated by...

Surprise U.K. rate rise won't impact RMBS deals, yet.(residential mortgage backed security)
August 14, 2006... The Bank of England unveiled a surprise 25 basis point rate rise last week that could leave consumers scrambling to make ends meet. However, on the securitization end, the market can draw comfort from the high level of fixed-rate mortgage debt...

XLCA provides fresh competition on Italian wrap front.(XL Capital Assurance)
August 14, 2006... Although monoline wraps have quickly become a customary feature on many Italian health-care receivable ABS, the latest offering under the region of Lazio's Atlantide S.r.l. series of deals gets its support from newcomer XL Capital Assurance...

Private-public partnership, project finance CDOs expected.(collateralized debt obligations)
August 14, 2006... Several CLOs backed by public-private partnerships (PPP) and project finance loans (PFL) have recently hit the European market. More are anticipated this year as issuers look for regulatory capital relief and managers scour the market for...

Pan-European deals on the rise, says Moody's report.(Brief article)
August 14, 2006... Five pan-European CMBS transactions have come to market so far this year. The number of these deals is expected to increase further as conduit lenders look to expand their operations in other European countries, said Moody's Investor Service in...

More on CityMortgage, upgrade for Russia's other RMBS.
August 14, 2006... More details have surfaced on Russia's most recent RMBS, the second to be issued publicly. Originated by CityMortgage, a $64.3 million, 28-year legal final A-floater piece priced at 160 basis points over one month Libor, while a $6.4 million B...

Announcement.
August 21, 2006... ASR is on its annual two-week hiatus from publishing. The next issue will come out Sept. 11. Enjoy what's left of the summer. Editorial Staff

Whispers.(appointments)
August 21, 2006... HYPO Public Finance Bank earlier this month closed the first synthetic CDO that derives credit enhancement solely from reference obligations, according to several sources. The $3 billion Pegasus 2006-1 came to market via two triple-A rated...

First student loan-backed single seller ABCP conduit graces market.(asset backed commercial paper)(Nelnet Student Asset Funding Extendable CP LLC)(National Education Loan Network)
August 21, 2006... Nelnet will administer the market's first single-seller ABCP conduit backed by student loan collateral. Credit Suisse structured the $5 billion market value extendable ABCP conduit, called Nelnet Student Asset Funding Extendable CP LLC, which...

SIV market grows, so do SIV-lites'.
August 21, 2006... Structured investment vehicles (SIV) take a long time to put together and require delicate balances of assets and liabilities to make profits. They are also experiencing spread tightening, much like every other structured finance asset class....

NPL ABS tipped in China.(asset backed securities)(non performing loans)
August 21, 2006... According to the latest reports from the People's Republic of China, the next wave of pilot securitizations by financial institutions (FIs) is likely to focus on non-performing assets. The central bank, People's Bank of China (PBOC), and...

CDO managers await crumbling credit to show their skills.(collateralized debt obligations)
August 21, 2006... Despite numerous calls and anecdotal evidence over recent months to the contrary, CDO investors still do not appear to be asking for much consolation when they buy into a deal run by a first-time manager. The so-called seasoned CDO managers -...

Citigroup: Consumer ABS to benefit in aftermath of bankruptcy reform.(asset backed securities)(Bankruptcy Abuse Prevention and Consumer Protection Act)
August 21, 2006... The jury is in. Investors can expect a lower level of consumer bankruptcy filings as a result of the Bankruptcy Abuse Prevention and Consumer Protection Act, which went into effect on Oct. 17. The act constituted the largest reworking of the...

GMAC secures $10B funding facility.(General Motors Acceptance Corp.)
August 21, 2006... General Motors Acceptance Corp. last week locked in the initial $10 billion portion of its three-year, $25 billion asset-backed secured funding facility from Citigroup. The facility came as a term of the April 3 sale of a 51% controlling...

Wachovia Securities taps Khan.(Asif Khan)(Brief article)
August 21, 2006... Wachovia Securities recently announced the hire of Asif Khan, who will join the firm as a managing director in alternative investments and CDO distribution within the structured credit products group. Khan will be responsible for global...

More Reg AB issues to contend with despite SEC guidance.(Securities and Exchange Commission )
August 21, 2006... The Securities and Exchange Commission recently released clarifying guidance on Regulation AB - Item 1122 (ASR, 08/14/06). ABS market participants have since applauded the move, although some have said that the clarifications are highly...

FTN likes 10/1 hybrid ARMs as 15s remain cheap.(adjustable rate mortgages)
August 21, 2006... FTN Financial last week took a look at relative value of 15-years versus 30-years, and recommended whole loan 10/1 hybrid ARMs as a way to take advantage of the cheapness in the 15-year sector. Analysts started first noted that the 30-year...

Mortgages rally strongly on favorable inflation reports.
August 21, 2006... From Aug. 14 through Aug. 16, the MBS Index added 12 basis points in excess return versus Treasurys as the market rallied sharply following the better-than-expected inflation reports, according to Lehman Brothers. Month-to-date through Aug. 16,...

Strong bank buying benefits mortgages.
August 21, 2006... Mortgages have benefited from strong bank demand in 2006. Through the first half of this year, MBS holdings at large U.S. banks surged to $67 billion, compared to $35 billion for all of 2005, according to a recent report from Credit Suisse...

Deutsche analysts: Pay attention to FICO scores.(Deutsche Bank Ag)(Fair Isaac & Co.)
August 21, 2006... Market participants should pay attention to FICO scores even if they are above 700 and command no pay-up, Deutsche Bank analysts said in a recent report. In a largely discount mortgage universe, superior carry is derived from faster prepay...

July senior loan officer survey shows credit standards remain stable.(Survey)
August 21, 2006... Last week, the Federal Reserve released its quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices. In general, credit standards held fairly stable over the period for C&I loans, commercial real estate and residential mortgage...

Privatization of Fannie and Freddie unlikely, analysts say.(Federal Home Loan Mortgage Corp.)(Federal National Mortgage Association)
August 21, 2006... Agency strategists from RBS Greenwich Capital last week downplayed the chances for Fannie Mae and Freddie Mac privatization. They believe that the potential for the GSEs to end their charters at this time is unlikely considering that neither...

August prepayments set to rise.(Brief article)
August 21, 2006... Prepayment speeds in August are anticipated to increase around 10% to12% overall in 30-year MBS as there are three more collection days in August compared to July. September is expected to see slowing of around 10% to 15% primarily due to a...

Fitch affirms all U.K. pub securitizations.
August 21, 2006... Despite the widely documented challenges faced by the U.K. pub industry - such as declining beer consumption, an increasing cost base and the upcoming smoking ban -companies are adapting to their environment enough to maintain levels of...

Sherwood credit card trusts escapes Egg's fate, for now.
August 21, 2006... Negative headlines continue to linger in the European credit card sector. But while performance may be down on most U.K. master trusts, it won't necessarily translate into a negative ratings action. Just last week, while Egg Banking plc's...

Canguru hops into market with newfangled FIDC.
August 21, 2006... A new structural twist will soon join the landscape of receivable investment funds (FIDCs), Brazil's most popular securitization vehicle. Structuring agent Hampton Solfise last week roadshowed an FIDC for Brazilian packaging company Canguru...

Approach of Mexico's first public REIT spurs talk.(real estate investment trusts)
August 21, 2006... As the issuance of Mexico's first public REIT approaches, the sector's potential is again a topic of conversation among structured finance cognoscenti. "The start-up phase is likely to be slow, but these deals will be increasingly attractive,"...

CVRD notes rattled by looming mega-purchase.
August 21, 2006... Holders of export-backed notes issued by Companhia Vale do Rio Doce aren't likely to be pleased with the courtship between the giant Brazilian iron ore producer and Canada's Inco Limited. CVRD has made a roughly $17.6 billion bid for Inco,...

Auto ABS drives Thai and Korean securitization markets.(asset backed securities)
August 21, 2006... Asian auto ABS activity is heating up. Boosting activity in this sector was Thai consumer finance company Siam Industrial Credit Co. (Sicco), which last week completed a THB3 billion ($80 million) auto loan securitization. Standard Chartered...

The Philippines kicks off 2006 ABS activity.(asset backed securities)(Brief article)
August 21, 2006... The Philippines has seen its first securitization of 2006 with the completion of a PHP9.8 billion ($192 million) deal backed by tax revenues owed to local government units (LGUs) (ASR, 02/13/06). The transaction, jointly arranged by two...