Asset Securitization Report articles from February 2003

Asset Securitization Report archives from February 2003

Whispers.
February 3, 2003... People Peter DiMartino was hired as a managing director in the Greenwich Capital Markets research department, where he will head the ABS strategy and research effort. He reports jointly to Doug Greening, head of agency MBS trading and Ron...

ABS Market eats its meat before it has its pudding in Arizona.
February 3, 2003... Before ABS market participants could pack up the golf clubs and head west to Arizona, there was business to be done last week, as supply totaled more than $7 billion. Credit card and home equity deals dominated the pre-conference landscape. ...

Veracruz cuts costs, raises eyebrows.
February 3, 2003... Capitalizing on easier market conditions and favorable reviews from rating agencies, the Mexican State of Veracruz slashed the yield on its debt by refinancing Ps2 billion (US$184 million) in asset-backed loans owed to federal development bank...

Should accounting drive reg cap levels?
February 3, 2003... NEW YORK - Asset-backed professionals are hoping that the federal bank regulators will grant relief against consolidated securitized assets for purposes of computing capital adequacy. Should that happen, the regulators would arguably be...

At the least, FAS 149 could curb trust preferred securities issuance.(Brief Article)
February 3, 2003... As if the new consolidation guidelines weren't dampening enough to CDOs, the Financial Accounting Standards Board will release Statement No. 149 this month, which is expected to eliminate the favorable treatment banks receive for their trust...

Moody's touts ambitious transition study.(Moody's Investors Service structured finance transition study)(Brief Article)
February 3, 2003... Last week Moody's Investors Service was preparing to release its most comprehensive structured finance transition study to date, tracking deals as far back as 1983, the rating agency said. While the rating agency does not purport to have...

Payment rate for MMCA floorplan deal triggers second early-am of 03.
February 3, 2003... For the second time this year, an outstanding ABS transaction has triggered an early amortization. While news broke earlier this month that a Conseco Finance private label credit card transaction was triggered by the bankruptcy of the...

GMAC starts education finance unit.(Brief Article)
February 3, 2003... An old name in the ABS market is prepping its first-ever foray into the student loan sector of the ABS market, sources confirmed. General Motors Acceptance Corp., unit Education Loan Finding Trust filed its preliminary shelf registration last...

VIEs and CDOs.(Brief Article)
February 3, 2003... A VIE is that in which the total equity investment is less than the expected loss, as described by Jim Mountain of Deloitte & Touche. As the rules are written, if the entity is deemed a VIE, any one party that holds the majority of the...

Not exactly a book signing...(Brief Article)
February 3, 2003... At last Monday's SRI Conference, FASB's Ronald Lott, author of FIN 46, responded as follows to inquiries from Marty Rosenblatt, chair of the ASF's accounting committee. These were unofficial tentative answers representing Lott's personal views,...

Congratulations Following is a list of ABS pros recently promoted.
February 3, 2003... Barclays Capital Barclays Capital has named Michael Wade as a managing director in the firm's ABS origination group. He will continue to run the bank's ABS team. Barclays has also hired Fouad Onbargi as a director in the bank's ABCP...

Geographic expansion, upward FICO migration on tap for subprime MBS.
February 3, 2003... With 64 investors in attendance, UBS Warburg hosted a one-day home-equity crash course last week, bringing to the podium four of the sector's largest issues. Among other concerns, the issuers discussed lender competition challenges that will...

Investors redefine secondary market for CDOs Make way for the revolution.
February 3, 2003... Rebellion: *: an act or a show of defiance toward an authority or established convention: Source: American Heritage Dictionary Thomas Jefferson once said "a little rebellion now and then is a good thing." He should have been a CDO...

Are CDOs broadening in appeal?
February 3, 2003... NEW YORK - As the public markets continue to stumble - and with war swiftly moving into the picture - investors are looking for revenue generating havens. That said, interest in alternative financing structures has increased, but it remains...

CDO Chatter Box.
February 3, 2003... * Drum roll please! The fickle CDO market has crowned this year's hot topic, collateral managers, and just in time for the ABS conferences in Arizona. Expect to hear mucho discussion about who's hot and who's not - backed up by factual...

Early week spread widening draws investors.
February 3, 2003... Market activity started off slow last week ahead of three notable events: Hans Blix's report to the United Nations Security Council regarding Iraq on Monday; Tuesday's State of the Union address from President Bush, and Wednesday's rate...

Rating agencies reexamine the issue of interest shortfalls.
February 3, 2003... In light of several non credit-related downgrades of CMBS classes - all involving interest shortfalls - the rating agencies are considering whether to incorporate the risk of a temporary interest shortfall from the risk of non-credit issues,...

S&P's CMBS Quarterly Review: Fourth Quarter 2002.
February 3, 2003... The following is an excerpt from a larger report, "CMBS Quarterly Review: Fourth Quarter 2002." The entire report can be found on Standard & Poor's RatingsDirect, or on the Web at www.standardandpoors.com Overall, Standard & Poor's expects...

The next refinancing trigger is on the horizon.
February 3, 2003... With current mortgage rates in the 5.90% level, Street analysts predict the market is now close to another refinancing explosion. Mortgage rates are so low in part, because the basis tightened quite dramatically in the beginning of the...

January CMBS calendar cleaned up.
February 3, 2003... January started off quiet due to conference schedules, followed by some light new-issue activity. However, what this January will be remembered for is the re-pricing of spreads. Coming out of last year's slow supply calendar, there were...

Office Sector deterioration highlights CMBS resiliency.
February 3, 2003... While volume in the European CMBS market has risen, property fundamentals are softening. Demand conditions are expected to remain weak, and subletting is becoming more common. The office sector is looking increasingly ominous - office rents...

2002 a strong year for European ABCP.
February 3, 2003... Market predictions of strong year-end volumes for ABCP issuance in 2002 are proving true. Despite difficult economic and regulatory conditions, the market grew to $178 billion at the end of the year from the $135 billion that opened up the...

NPLs show strong market potential.
February 3, 2003... Italian NPL market activity stirred awake last week with talks of a $215 million U.S. equivalent transaction dubbed Mutina S.r.l in the February pipeline. It's testament to both the stability and cheap pricing displayed among many of the...

Once seen as default survivor, Argie's Salta Hydrocarbon may yet succumb.(Brief Article)
February 3, 2003... While countless Argentine issuers sank into default under the weight of the crisis, Salta Hydrocarbon Royalty stood among the few that made good on their debt during 2002. Yet recent events suggest the structure is under serious strain....

Germany clarifies tax issue for bank securitizations.
February 3, 2003... Observation from Kurt Dittrich ofLinklaters Oppenhoff & Rdler The German Finance Minister, Hans Eichel, has announced plans to clarify a tax issue that has negatively affected securitizations of bank receivables in Germany. Until now it was...

Brazil expected to please MT-100 enthusiasts this year.
February 3, 2003... For 2003, Latin America's cross-border enthusiasts have their sights trained on financial future-flows in Brazil, known as MT-100s. Barring a sustained war with Iraq, market watchers foresee a busier year than election-marred 2002, particularly...

Santander Brazil gives investors a nibble of Nestle risk.
February 3, 2003... Drawn by a singular chance to swallow Nestle risk, Brazilian investors munched down a R$45 million (US$12.6 million) deal backed by a leasing agreement with the global food giant's signature. Led by Santander, the transaction was upsized a...

Fourth-Quarter 2002 New Issues Guide.
February 3, 2003... Second largest Qtr ever closes out record year of ABS volume New-issue ABS supply picked up in the final three months of last year, totaling just over $107 billion. This was the second-largest quarter by volume in both the history of the...

Whispers.(news briefs)
February 10, 2003... News UBS Warburg is moving into the credit card sector, on both the principal- and asset-finance aspects of the business. The firm is actively exploring portfolio acquisition as well as planning to hire a banker to handle its credit...

Another year of evolving NIMs, seen moving into autos, cards.(net-interest margins to move into other applications)
February 10, 2003... PHOENIX, Ariz. - Despite the recent challenges facing the securitization of net-interest margins, the technology is adaptable and is anticipated to survive the current legislative challenges and the perceived stagnant interest rates that some...

Fan and Fred say yes to disclosure.(Fannie Mae, Freddie Mac to offer disclosure)
February 10, 2003... Last Monday Fannie Mae and Freddie Mac announced plans to begin disclosing six new loan/borrower attributes in their MBS pools. The additional pool level disclosure items were recommended in a study conducted by a joint task force of the...

Spiegel misses MBIA's deadlines.
February 10, 2003... In its 10-K filing with the Securities & Exchange Commission (SEC), The Spiegel Group disclosed that it was not in compliance with agreements it had made with MBIA last May, when the two parties struck a settlement to quell the monoline's...

In the sunshine, Arizona starts on a reflective note.
February 10, 2003... PHOENIX, Ariz. - Arizona proved much less a panacea for industry pundits at ABS West than in years past. Golf rounds were held amid flags flying at half-staff - portions of the Columbia space shuttle were located in nearby Flagstaff. And much...

Box seats no longer promise profits.
February 10, 2003... Even spanking new professional football stadiums have lost some of their cash flow potential and stability, according to a conference call held by Fitch Ratings last week. Some of the newest stadiums are sporting state of the art seating,...

Moody's questions the responsibilities of trustees.(Moody's Investors Service to reassess its ratings on certain transactions)
February 10, 2003... Last week Moody's Investors Service announced it would reassess its ratings on transactions it deems to have, "trustee risk," or risk associated with a trustee whose understanding of its role and responsibilities is different than Moody's...

Researchers defend subprime, caution against "NextCard hysteria".
February 10, 2003... PHOENIX, Ariz. - In a somewhat animated discussion at Information Management Network's ABS West gathering last week, bank research analysts said that the recent headlines were creating a false perception that the debacles seen last year with...

Canadian Market to Benefit from True Sale Ruling.
February 10, 2003... by Martin Fingerhut Blake, Cassels & Graydon LLP Canadian Securitization ended the year on a high note with the release of the first securitization case ever to reach the Canadian courts. The BC Tel decision upheld the transaction as a true...

Appetite for new CDO products focused on real estate.
February 10, 2003... PHOENIX, Ariz. - CDO investors, privately, confessed to growing discomfort with the credit side of the business at last week's ABS West, hosted by the Information Management Network. As a result, collateral managers and bankers alike were not...

CDO market debates FASB effects.(collaterized debt obligations outlook)
February 10, 2003... PHOENIX, Ariz. - A market contending with massive volatility and continued headline risk has found a new monkey on its back. Or, rather, a gorilla. Discussions about the health of the CDO market during ABS West revolved around the new...

CDO Chatter Box Special Edition Chatter from the conference.
February 10, 2003... * "Any information should go through the CDO's trustee, not the rags. Although maybe I shouldn't call them that." - Bear Stearns' Jean Fleischhacker. Aww, c'mon Jean! Muckrakers made sure our hamburgers contain real beef! Let's chat over some...

Secondary Bid Emerges for Whole Loans.
February 10, 2003... By Kingsley Greenland, co-founder and CEO of Boston-based DebtX, the largest dedicated loan-sale advisor for commercial debt. Weak economic conditions and a spate of high-profile bankruptcies continue to depress the normally robust...

JPMorgan expands servicing, trustee operations to a global scale.
February 10, 2003... While JPMorgan Chase has long offered trustee services to clients, JPMorgan just recently fully integrated its operations following the January 2002 acquisition of Systems & Services Technologies Inc. (SST). The firm hopes to be the one-stop...

Mortgage spreads continue to grind tighter.
February 10, 2003... Mortgages remain fairly well supported as technicals are still favorable and the market holds range bound on the uncertainty of war with Iraq. Over the Wednesday-to-Wednesday period, spreads were tighter. For example, 30-year Fannie Mae 5.5s...

CTL guru delivers the arm's-length angle.(credit tenant lease expert provides his perspective)
February 10, 2003... Accidental standard-bearer for the credit tenant lease community Kyle Gore, managing director of the structured finance group at Baltimore-based Legg Mason Wood Walker, weighed in on the likely affect FASB Interpretation No. 46 (FIN 46) will...

Chilean government payment bond breezes into harsh political climate.
February 10, 2003... Under the stormy cloud of a relentless political corruption scandal, Chile's Santander Sociedad Securitizadora issued a bond packed with government risk in mid-January (see table). The domestic deal is backed by future payments to a public...

Brazilian securitizations amble through a torpid summer.
February 10, 2003... Brazil's domestic securitization market has fallen victim to a combination of the summer doldrums and potential management changes at state pension funds engineered by the new presidential administration. Dealmakers are either moving forward at...

Spanish FTPYMES lose more coverage.
February 10, 2003... Budgetary constraints have prompted the Spanish Treasury to further reduce guarantees provided to Spanish-styled SME CLOs called FTPYMES. In 2001, the Spanish government cut 15% from the guarantee coverage it offers on triple-B tranches, and...

Dutch consumer risk on the rise.(Brief Article)
February 10, 2003... According to market reports, over 50% of total European securitization issuance in 2002 was consumer risk-related. The big question this year is how the consumer will behave, and research conducted in the Netherlands seems to provide some...

Colombia's Santander wraps up MBS after troubled launch.(Brief Article)
February 10, 2003... After tripping on an MBS placement around the Christmas season, Santander definitively closed the deal at the end of January. Due to a paucity of investors at the launch, the bank held back Ps65 billon (US$22 million) of a five-year tranche....

Master Trusts drop extra credit enhancement, testament to good times ahead?
February 10, 2003... With another record year under its belt, the U.K. RMBS master trust looks ready to lead another year of strong RMBS volumes - but have the worsening economic conditions finally put these structures to the test? According to JP Morgan...

Whispers.(various news briefs)
February 17, 2003... To expand its ABS syndicate, Banc One Capital Markets would like to hire another seasoned professional to work on its Chicago-based trading desk. The desired candidate, who would report to managing director Andy Cherna, should have experience...

Wachovia's APEX latest to enhance CDO structure using derivatives/swaps.(Wachovia Securities Inc.)
February 17, 2003... Last week, Wachovia Securities let the CDO market glimpse its APEX structure and issuance platform. Apparently, APEX is testament that the CDO market is evolving such that the interests of CDO equity investors are more aligned with debt tranche...

State of Mexico sheds the past.(efforts to entice investors)
February 17, 2003... For years a market outcast, the State of Mexico is undergoing intensive treatment to win over investors. Since Arturo Montiel became governor in late 1999, his PRI administration has pushed out debt maturities, tamed a beastly budget, and...

Arizona still alive in week No. 2.(9th Annual Asset Securitization Symposium)
February 17, 2003... Scottsdale, Ariz. - Amid airy courtyards and a relaxed atmosphere at the Fairmount Princess, attendants at last week's 9th Annual Asset Securitization Symposium, hosted by the Strategic Research Institute, tended to focus on lessons from the...

The boat's still afloat at Centre Pacific.
February 17, 2003... Contrary to rumors circulating last week, Centre Pacific did not shed its entire CDO group, although the firm did in fact pull its Cascade CLO from the market, liquidating the loan warehouse facility in full profit, sources said. According...

A brighter side to AmeriCredit.(Brief Article)
February 17, 2003... ABS market participants will ultimately benefit from AmeriCredit Corp.'s efforts to cut costs and maintain adequate capital, although it may be painful in the process. On Feb. 12, AmeriCredit announced, among other things, that it will...

If issuers can steal, where's the deal cop?
February 17, 2003... SCOTTSDALE, Ariz - While it probably won't trigger a slew of new slang as did Enron Corp., the debacle of National Century Financial Enterprises, and how to protect against a repeat, was the topic du jour in Arizona last week. After all, the...

Market anticipates FIN 47: The interpretation of FAS 140...
February 17, 2003... Compared to the snail's pace usually associated with final rulings from the Financial Accounting Standards Board, the wave of significant new rules this year will have accountants earning their fees, said panelists at the Strategic Research...

Delta takes a licking, keeps on ticking.(Delta Financial)
February 17, 2003... While there haven't been many success stories for the small home equity specialty finance lenders of the 1990s, Delta Financial is perhaps the Energizer Bunny of the sector. The company is planning its next deal within a month, likely with...

Home equity supply hits post-conference ABS primary market.
February 17, 2003... New issue activity picked up last week, as the winter conference season came to a close. Just over $9 billion in ABS product was marketed, $6.05 billion of which priced as of press time and the remainder scheduled to wrap Friday. While the...

Fannie speeds in-line, Ginnies outpace expectations.(Brief Article)
February 17, 2003... Fannie Mae speeds declined about 5% on aggregate, which is in line with expectations. Of note, however, speeds dropped greater than expected on the 7% vintages. Despite mortgage rates dropping seven basis points, and an extra 1.5 days on the...

Freddie struggles to maintain market share given Fannie's pricing advantage.(Freddie Mac)
February 17, 2003... With total Freddie Mac production for the month of January down significantly, market observers are wondering if the GSE is actually losing market share to rival Fannie Mae, or if it's merely a case of monthly fluctuations in production flows....

FHA hybrid program will not cause a stir.
February 17, 2003... The Federal Housing Authority (FHA) is set to launch a hybrid ARM program that would include 3/1s, 5/1s 7/1s and 10/1s. Analysts say that it has little to no current relevance for GNMA fixed-rate relative value as the earliest possible...

Leveraged loans the object of European CDO market affection.
February 17, 2003... With economic hardships still throwing punches at the high-yield market, more European market players are turning a keen eye to leveraged loans. As a result, CDO managers say that there has been an increase in appetite as well as opportunity...

Ireland makes bid to attract more SPVs onshore.
February 17, 2003... By December last year, details of legislation that would bring Irish securitization up to date with market demands were being finalized. With the passing of the legislation earlier this month, Ireland could potentially become the jurisdiction...

European pipeline steams ahead.
February 17, 2003... The primary issues market has virtually deafened secondary market activity. RMBS transactions continue to dominate, with Italy and the U.K. leading the pack. "Investor demand appears to have been somewhat limited thus far in 2003," reports...

Argentine exporters keep the securitizations coming.
February 17, 2003... While most of the Argentine market remains frozen in suspended animation, the export sector can't keep still. The thinly disguised YPF trust that dropped a two-tranche US$357 million deal in late December is at it again, this time with a US$163...

BBVA Bancomer hops from tollroads to waterworks.
February 17, 2003... In the works since at least September, the Veracruz-Cardel securitization of future toll-road revenues hit the market Feb. 4. BBVA Bancomer was lead manager and Inbursa was co-lead. Amounting to Ps700 million (US$64 million), the deal's...

Whispers.(Asset backed securities industry news briefs)
February 24, 2003... The ABS market grieved last Thursday as Michael G. Baker, a managing director at Credit Suisse First Boston, lost his four-year battle with cancer. Baker, 42, is survived by his wife, Amy, and four children. A long-time ABS veteran, he was an...

Slow-to-develop Conseco reorganization picks up steam.
February 24, 2003... The tug-of-war between ABS bondholders and Conseco Inc. picked up steam last week, insiders told ASR. While little to no progress was made during recent negotiations, pressure from the bankruptcy court judge, Carol Doyle, could lead to a...

Euro ABS pipeline unyielding.
February 24, 2003... Though six new deals have priced in the European securitization market so far this month, the pipeline is still robust, maintaining the strong momentum already seen this year. With a E6 billion transaction looming and several Italian issues...

FIN 46 strategies: Exp. loss tranche.(Financial Accounting Standard Board's guidelines)
February 24, 2003... With just a few days left in February, it's likely the asset-backed commercial paper market will see its second straight month of contraction. Through last week the market was down about $17 billion from December's high of $726 billion...

Surrounded by questions, AmeriCredit fulfills promise with new deal.
February 24, 2003... As its stock price hovers below the price of a cup of coffee at Starbucks, AmeriCredit Corp. is on the road with its first auto-loan securitization of the year, sources said. Amid many questions centered on the troubled lender's viability, the...

Enron continues to endanger securitization.
February 24, 2003... Reminiscent of a January release from the Senate Permanent Subcommittee on Investigations, the Joint Committee on Taxation's recently published inspection of Enron Corp.'s tax maneuvering includes several direct jabs at securitization...

OCC Asks More About HSBC Deal.(Office of the Comptroller of the Currency seeks details to HSBC Holdings PLC's accord to acquire Household International Inc.)
February 24, 2003... HSBC Holdings PLC faces another round of questions about how it will offer prime loans through Household International Inc. if its $14.2 billion deal to buy the Prospect Heights, Illinois-based consumer lender gets the green light. The...

Seller/Servicer Risk trumps Trustee's Role.
February 24, 2003... By Kevin Duignan and Roger Merritt, both managing directors at Fitch Ratings While the default rate for U.S. ABS transactions remains low, in the last few years there has been a noticeable increase in ABS related performance problems,...

Foreign captives capitalize on lack of auto ABS supply.
February 24, 2003... New-issue activity picked up last week, in sessions of wintry holiday-shortened trading. While over $12.3 billion was announced or had been left over from the previous week, $6.51 billion had priced as of Thursday's close and the bulk of the...

MBS recap: The grind tighter continues.
February 24, 2003... Mortgage flows were steady both ways throughout the week. Originator selling remained within normal levels with the exception of Tuesday. The day saw nearly $2.5 billion. Supply managed to pressure spreads wider; however, this attracted money...

Goldman Sachs: GNMAs not a buy.(Ginnie Mae)
February 24, 2003... Even with the Ginnie Mae 5.5% coupon starting to move into the spotlight, analysts are hesitant to recommend an overweight in the sector yet. A sharp market sell-off could bring GNMA speeds to a near halt. This is why researchers from Goldman...

S&P introduces new methodology for computing convexity risk in MBS portfolios.(Standard & Poor's and mortgage-backed securities)
February 24, 2003... Standard & Poor's recently announced a revised methodology to calculate the convexity risk in the mortgage-backed portfolios of life insurance companies. Though in the near term this would have a minimal impact on the amount of MBS...

ISDA updates derivatives definitions.(International Swaps and Derivatives Association)
February 24, 2003... The International Swaps and Derivatives Association (ISDA) updated its credit derivative definitions earlier this month, and while market participants agree that the changes are welcome, the documentation is still largely regarded as a work in...

OFT opts to axe extra fee, rules for U.K. retailers.(Office of Fair Trading)
February 24, 2003... A preliminary ruling by the Office of Fair Trading made earlier this month proposed to enact potential changes to existing interchange fees that can amount to approximately 1% of overall cash yield, explained Fitch Ratings. While it looks as...

War climate in Brazil puts deals on the defensive.
February 24, 2003... Skittishness over a looming invasion of Iraq is clobbering Brazil. In a move that is at very least indirectly linked to the escalating conflict, Brazil's Central Bank jacked up the benchmark interest rate by 100 basis points to 26.5% last week...

Colombian dealmakers bank on market's sweet tooth.
February 24, 2003... Swinging their scythes into Colombia's lush field of agriculture securitizations, Mercancias y Valores and Corfinsura have made a clearing for sugarcane this season. The investment banks are separately cultivating deals backed by the sweet...