Asset Securitization Report articles from July 2004

Asset Securitization Report archives from July 2004

Whispers.
July 5, 2004... Michael Kanef was named as group managing director in charge of asset finance at Moody's Investors Service, replacing Andy Silver, who is resigning to accept a position at Rutgers University. See related story on p. 14. The CDO research...

Countrywide, yes Countrywide, leads in U.S. ABS at 2004 halfway mark.
July 5, 2004... Calabasas, Calif.-based Country- wide Securities Corp., from about as far from Wall Street as you can get, was the leading underwriter of new-issue ABS at the halfway mark of the year - the first time a captive broker-dealer underwriter has...

A day in the sun for timeshare ABS.(Asset Backed Securities)
July 5, 2004... Sunterra Corp., which had been a dominant timeshare player prior to filing for bankruptcy in 2000, is hoping to present the ABS market with its first term transaction in almost five years. The deal is scheduled for this month. "We were...

Big bon voyage awaits PDVSA.(Petroleos de Venezuela)
July 5, 2004... It may be time for investors to kiss Petroleos de Venezuela (PDVSA) goodbye. For many, the farewell will be far from teary. The oil giant launched a tender offer early last week to retire roughly US$2.6 billion in export-backed notes issued via...

Basel II unveiled, and in more refined terms: Uncertainty remains over the finality of this draft.(revised international capital framework)
July 5, 2004... Although the Bank for International Standards unveiled what's intended to be the final draft of the new Basel II accord, professionals on both sides of the Atlantic believe there may be some further tweaking before the year-end 2006...

Eligible liquidity to draw 10% risk weight in final rules.(Industry Overview)
July 5, 2004... In its final iteration of its ABCP risk-based capital guidelines, the Federal Deposit Insurance Corp. lowered the eligible liquidity conversion factor to 10% from the 20% it proposed last fall. Industry pundits were pushing for 7%. Also, the...

Quarter-end, Fed and July 4th slow U.S. ABS primary.
July 5, 2004... After setting a vigorous pace to close out the second quarter, the U.S. ABS primary market slowed considerably last week, pricing just under $5.3 billion. Slowed by issuers' desire to complete quarter-end funding before the Fed's 25 basis point...

Yield pickup seen for rare agribusiness CLO.(Northwest Farm Credit Services)(Fair, Isaac and Company (credit scoring model))(Collateralized loan obligations)
July 5, 2004... Northwest Farm Credit Services recently closed a $57 million synthetic CLO, referenced to U.S. government agency subsidized loan payments to farming operations in the Pacific Northwest. The structure of the deal offered investors a wide array...

Correction.
July 5, 2004... Due to a production error in the 2004 Asset Securitization Directory, the incorrect phone, fax number and Web address for Deutsche Bank, Trust & Securities Services was published.The correct information for Deutsche Bank, Trust & Securities...

A rough seven days for airlines and aircraft ABS.(Asset Backed Securities)
July 5, 2004... Several aircraft deals took further punishment last week, with Moody's Investors Services doling out downgrades on 23 classes from four separate trusts. The deals were placed on review several months before United Airlines made headlines with...

Euro equity index-linked CDO emerges.(Collateralized Debt Obligations)
July 5, 2004... Investors in the European marketplace will be able to reference an equity index through a newly unveiled index-linked synthetic CDO structure, which Standard & Poor's has branded a first in the industry. While market sources may argue that...

Kanef named new head of Moody's asset finance.(Residential Mortgage-Backed Securities)(Asset-Backed Commercial Paper)
July 5, 2004... The personnel shakeup at Moody's Investors Service is seemingly over, as last week the rating agency promoted Michael Kanef to new group managing director of U.S. asset finance ratings. Kanef takes over for Andy Silver, who announced his...

Month-end, FOMC statement benefit mortgages.
July 5, 2004... Last week saw active two-way flows both before and after the Federal Open Market Committee's statement. Investors were fairly confident about what the Fed would say and took advantage of the prospect of curve steepening and lower volatility...

Mixed feedback on the effect of rising rates.(Home Equity Line Of Credit)
July 5, 2004... With interest rates rising - marked notably by the 25 basis point hike in Fed funds last week - market participants are concerned about the impact on homeowners, especially as consumer debt has increased substantially through the last...

FHLB bank signs agreement with regs.(Federal Home Loan Bank)
July 5, 2004... The Federal Housing Finance Board - which regulates the Federal Home Loan Bank system - last week signed an agreement with FHLB Chicago's board to implement changes to FHLB Chicago's risk and capital management, governance and internal audit...

UBS tops the RMBS tables once again.
July 5, 2004... UBS is once again at the top of the manager rankings for both agency and non-agency MBS, according to the results from Thomson Financial's league tables for the first half of 2004. UBS also placed first for the rankings over the same period...

Analysts disagree over the impact of turnover on prepayments.
July 5, 2004... While prepayments are expected to drop dramatically in the months ahead - given the decline in refinancings - there are still opportunities for investors in discounts as a result of strong turnover. In a recent report from Bear Stearns,...

LatAm players may find affinity with Aries.(Paris Club)(Industry Overview)
July 5, 2004... The issuance last week of collateralized Paris Club debt owed by Russia to Germany in a deal known as Aries spurred talk that other debtors may eventually follow suit. "It's definitely a first effort to make this debt market-based," said Jose...

Investors drive DPR deals in El Salvador and Peru.(Asset backed securities)(diversified payment rights )
July 5, 2004... At the bidding of a single investor, El Salvador's Banco Cuscatlan recently issued a US$50 million bond backed by diversified payment rights (DPRs), according to a source. ING arranged the transaction, which funded on June 28. The buzz was that...

Brazil's FIDCs glom onto loans for government employees.
July 5, 2004... Receivables investment funds (FIDCs) remain the leading game in town for Brazil's domestic ABS market, with three transactions dropping into the pipeline last week. Two of the deals are backed by personal loans for government employees. Banco...

Spreads widen as Europe slides into summer mode.(Industry Overview)
July 5, 2004... While the summer nights of 2004 may be cooler than last year's record-breaking highs, the securitization market continues cranking up the heat. Merrill Lynch is seeing around 40 deals in the pipeline, and the firm estimates volume will reach...

Covered bonds blanket U.K., despite absence of legislation: Germany prepares to expand inclusion in Pfandbriefe.(Residential Mortgage-Backed Securities )
July 5, 2004... A phenomenon that has taken both the U.K. and continental Europe by storm, covered bonds are now routinely issued by many of the major mortgage lending institutions in the U.K., and are seen as an alternative to traditional RMBS. With the...

Wachovia beefs up Asian business with significant hire.(Wachovia Securities hires Greg Donohugh in attempt to develop Asia business)
July 5, 2004... Charlotte-based firm eyes principal finance and opportune hires to expand franchise It is no secret that Wachovia Securities is a major player in the U.S. securitization markets. The firm, which in April restructured its fixed-income and...

Time is REIT for Fubon.(Fubon Construction to launch Real Estate Investment Trust)
July 5, 2004... One of Taiwan's biggest construction companies, Fubon Construction, will launch the country's first REIT this month. In a slightly surprising move, Fubon Securities is arranging the NT$6 billion (US$180 million) deal by itself, without the aid...

Whispers.(appointments in the financial sector)
July 12, 2004... MBS analyst Michael Youngblood has jumped to Friedman Billings Ramsey from GMAC-RFC, where he had worked since January 2003. In his new position, Youngblood will work out of the Arlington, Va., FBR office. Prior to GMAC-RFC, Youngblood had...

In a slow year for ABCP, new innovative conduits promise volume.
July 12, 2004... SuperLumina Funding, a newly rated multi-seller ABCP conduit, plans to fund about $1.25 billion in U.S. dollar, triple-A rated new-issue CDOs as its first course of business. Last week Moody's Investors Service authorized SuperLumina on a...

LatAm Q2 wrap: All about the rates: Cross-border perks up Mexicans run for cover.(analysis of influences on Latin American bond markets)
July 12, 2004... All of Latin America succumbed to the anticipated onset of the tight money cycle in the U.S. during the second quarter. But responses from securitization markets in the region ran the gamut. While higher interest rates only seemed to encourage...

ING's conduits: Back in Asia?
July 12, 2004... ING Securities last week refuted the long running rumor that its Asian securitization operation had effectively shut down following the heavy losses taken by the bank on the National Century Financial Enterprises scandal in late 2002. ING,...

New issuer seeks Clout in credit card ABS market.
July 12, 2004... A Westport, Conn.-based credit card issuer, which targets college undergraduate and graduate students, is marketing its inaugural securitization, with the hopes of launching this week. Specialty monoline credit card issuer Clout Financial...

Lehman ABS Index sliding into second half of '04.
July 12, 2004... While the Lehman Brothers ABS Index posted strong returns for the first half of 2004, outperforming Treasurys by 53 basis points, the last four months have been less promising, according to researchers at the bank. The residential sectors...

Post-July 4th U.S. ABS primary offers no fireworks.
July 12, 2004... As market participants recovered from the long holiday weekend, U.S. ABS primary issuance slowed to an indolent trickle. Total volume was a meager $1.8 billion, with only $1.3 billion actually pricing. Analysts expect the calendar to build...

Correction.(Correction Notice)
July 12, 2004... Due to a production error in the 2004 Asset Securitization Directory, the incorrect phone, fax number and Web address for Deutsche Bank, Trust & Securities Services was published. The correct information for Deutsche Bank, Trust & Securities...

CLO managers face hurdles due to ratings agency constraints.
July 12, 2004... The practice of "notching" adjusting ratings, or refusing to rate, certain asset pools in a structured product unless a substantial portion of the assets are rated by the same agency rating the structured product has been a controversial issue...

Boullioun aircraft lease ABS likely post-sale.
July 12, 2004... The recently announced sale of Boullioun Aviation Services by WestLB will likely lead to an aircraft lease securitization shortly after the transactions' close, said sources with knowledge of the situation. Boullioun's attractive lease...

JPM's Miller: Merger puts spotlight on trust services.
July 12, 2004... Trustee and servicer operations are under new management at JPMorgan Treasury & Securities Services (TSS) and it appears so is the unit's image as a business line, thanks to the spotlight thrown on it by the July 1 merger completion date with...

Fixed recovery CDS: Mitigating cheapest to deliver?
July 12, 2004... A credit default swap (CDS) with a fixed recovery rate that is determined at inception and applied to all credit events is sometimes referred to as a "digital" or "binary" credit default swap. These structures offer both protection-buyers and...

June prepayment speeds slow less than expected.
July 12, 2004... Mortgage activity was quiet in the holiday-shortened trading week. Unlike the previous session when convexity-related trading dominated, last week carry and low volume took precedence. This led to more up-in-coupon trading. Also contributing to...

New home purchases soar, pushing further turnover activity.(Industry Overview)
July 12, 2004... Last week the Mortgage Bankers Association (MBA) Purchase Index rose 15% and came in at 500.9, a level that is rarely seen. To give some idea of the rarity, last Jan. 16, the index hit 502 - the only time in recent history that the index had...

Canada welcomes Alt-A MBS securitization, Eh...
July 12, 2004... With the completion of the first term securitization of Alt-A mortgages in Canada, the market is now ripe for these types of deals going forward. GMAC Residential Funding of Canada last week announced the closing of its $278 million...

Lehman looks at value in hybrid IOs.(Brief Article)
July 12, 2004... Lehman Brothers is recommending the hybrid IO sector as a place of opportunity for relative-value players, in a newly issued report. Valuations make these IOs attractive substitutes for trust counterparts even with stressed prepay...

Euro MBS buyers get crash course in prepayment analysis.(Mortgage Backed Securities)
July 12, 2004... Increased prepayment speeds paired with limited reinvestment opportunities have led to spread compression in the European RMBS market of late, but a lack of prepayment data remains a hindrance that needs to be explored. Fitch Ratings held a...

With Basel II out, market explores a shift in dynamics.
July 12, 2004... Certain asset classes, such as credit cards, may benefit from the BIS' return to the complex supervisory formula. While it is still unclear how well the bulk of the securitization industry will welcome the so-called final release of Basel...

European ABS forward calendar tops 15 billion mark.(Residential Mortgage-Backed Securities)(Industry Overview)
July 12, 2004... The sellside is hoping to price a few deals before the August lull, as trading levels are stabilizing in the secondary markets, according to reports. The European calendar continued to build last week, offering investors some variety in RMBS -...

Asia roundup: Singapore and Thailand showing life.(Industry Overview)
July 12, 2004... Standard Chartered Bank is rumored to be involved with HSBC Securities on the Singapore-originated securitization of loans to small and medium-sized companies based in the Lion City. ASR recently reported HSBC is working with SPRING, the...

Whispers.
July 19, 2004... RBS Greenwich Capital has begun its non-mortgage ABS ramp-up with the hiring of former Banc One Capital Markets bankers, including credit card ABS specialist Dan McGarvey and auto ABS specialist Jeff Orr. Also starting Monday are Al Yoshimura,...

Conservative approach gets Moody's cut out of HEL ABS, CDOs.
July 19, 2004... Though structurers may deny it, Moody's Investors Service was left off some recent home-equity ABS, as well as home-equity focused CDOs, because of its more conservative ratings methodology on deeply subordinated classes of hyper-tranched...

Gazprom to mine new field: ABS.
July 19, 2004... Russia's first publicly rated future-flow deal is coming. On roadshow last week in Europe and this week in the U.S, Gazprom International is expected to tap US$1 billion from many of the same investors that purchase export-backed deals from...

Citibank tipped for Thai card deal.
July 19, 2004... Citibank has been mandated to arrange the second securitization by the Thai subsidiary of Aeon Credit Service Co., Asian ABS bankers said. Aeon Thana Sinsap made its ABS debut in February with a THB1.5 billion (US$36.8 million) hire-purchase...

Industry groups hit SEC from both sides.(United States. Securities and Exchange Commission)
July 19, 2004... In separate comment letters to the Securities and Exchange Commission - together more than 170 pages - both the American Securitization Forum and The Bond Market Association said that further concessions to the proposed rule changes regarding...

U.S. ABS primary back to life with $13 billion making the rounds.
July 19, 2004... The U.S. ABS primary market was roused from its midsummer slumber last week by more than $13 billion in total volume. Of that total, about $7.2 billion had priced as of Thursday night. Real estate ABS made up the bulk of new issue, with $5.08...

Market adjusts to mixed-collateral MBS, UBS says.
July 19, 2004... The sharp decline in short-term interest rates has encouraged subprime mortgage lenders to include more fixed-rate collateral in floaters during the past two years, and investors have lately begun to balk at the embedded cap costs in mixed...

DVI releases final cash reconciliation surplus/shortfalls.
July 19, 2004... Bankrupt medical equipment lessor DVI Inc. reported cash shortfalls in four of its nine outstanding securitization trusts and a slim surplus on an aggregate basis, according to records filed with the Securities and Exchange Commission. The...

RBS Greenwich adds structured credit to CDO group.(Brief Article)
July 19, 2004... With a decent showing this year already, RBS Greenwich Capital is planning a significant expansion of its CDO group, affirming its commitment to the sector with the hire of Romita Shetty, who starts later this month. Shetty was formerly...

A $325M Turkish DPR wrapped by two monolines.(Brief Article)
July 19, 2004... A $325 million securitization of diversified payments rights from Turkish commercial bank Garanti Bankasi recently hit the private placement market, sources said. Two monoline bond insurers wrapped the transaction. JPMorgan Securities...

New addition to UCC IP strategy arm.(Brief Article)
July 19, 2004... The first national correspondent for UCC Capital Corp. in the life sciences sector was announced last week as the firm moves into expansion mode, a rollout that also included the launch of a new Patent Royalty Trust, aimed at academia. ...

Global SF Q2 performance showed improvement.
July 19, 2004... Standard & Poor's rated global structured securities performed better during the second quarter of 2004 than during the first. The upgrade rate for structured finance securities was more than three times the downgrade rate. This positive trend...

Spreads in a holding pattern, supply dips temporarily.(Brief Article)
July 19, 2004... The CMBS market grew considerably quiet last week with a few deals pre-marketing but little other action worthy of mention. Looking forward, there is a mixed view on spread performance, but, in the main, there are more risks associated with a...

Charles Schwab executes sizeable CTL.(Credit Tenant Lease)(Brief Article)
July 19, 2004... A hotly sought-after credit tenant lease for Charles Schwab & Co. had investors complaining they couldn't obtain large enough slices of the pie to satiate their appetite. The CTL was sized near $135 million. The recently executed...

Hotels stage a comeback in CMBS.(Commercial Mortgage Backed Securities)(Moody)
July 19, 2004... After a three-year hiatus, hotel properties are starting to creep back into CMBS transactions. The CMBS market has seen three offerings backed solely by hotel properties so far this year, the latest of which was a $951.6 million floater via...

Ginnie Mae launches strip program.(Brief Article)
July 19, 2004... Government National Mortgage Association has rolled out a Stripped Mortgage-Backed Securities Program (SMBS Program). This stripped product results from the creation of interest- and principal-only carve-outs through a Grantor trust structure,...

Heavy selling in Fannie Mae 5s.
July 19, 2004... Volatility increased as the market sold off ahead of late week's data that included PPI and CPI. This triggered better selling in mortgages, particularly in Fannie Mae 5s, where traders reported the sale of a very large position by a bank...

Subprime players snag market share from Ginnie, analysts say.
July 19, 2004... With issuance in the Ginnie Mae sector declining noticeably, analysts are looking at factors aside from housing market fundamentals that may be taking Ginnie borrowers away from the sector. "Evidence suggests that the private sector (as...

Fixed-rate MBS supply to decrease.(Mortgage backed securities)
July 19, 2004... With refinancings and cash-outs waning, net fixed-rate supply for this year is expected to be the lowest since 2000. The current rate of new home sales suggests 2% annual growth in net fixed issuance, says JPMorgan Securities. ARMs now...

Mexico's Casas Beta breaks issuance standstill.
July 19, 2004... Mexican domestic securitizations are returning, albeit slowly. With a Ps400 million (US$35 million) bond, housing developer Casas Beta shattered the issuance paralysis that had gripped the market for all of the second quarter. Placed July 8,...

Banco Itau hits market with BBA flows brought into structure.(Brief Article)
July 19, 2004... Even though the cross-border market is bracing for a sizable deal from Gazprom (see p.1), issuance has slowed a bit from June. So far this quarter, a single Emerging Market deal has priced. Earlier this month, Banco Itau issued a US$105...

PDVSA buyback tender nears 96% as holdouts hang on.(Petroleos De Venezuela, SA )
July 19, 2004... Weeks before the deadline of a mega-buyback, a unit of state-owned oil giant Petroleos de Venezuela announced that investors representing nearly 96% of US$2.6 billion in structured bonds had tendered their paper via leads JPMorgan Securities...

Whispers.
July 26, 2004... UBS managing directors Laurie Goodman and Chuck Mounts have been named global co-heads of a reorganized research group, named Fixed Income Rates and Currency (FIRC). Goodman will head the U.S. fixed-income and interest rate coverage out of New...

Who's afraid of Alan Greenspan? No one we know...
July 26, 2004... While the financial markets were in trepidation last week ahead of Alan Greenspan's comments, the Fed chairman seemed to reaffirm a measured tightening bias - which most agree translates to a 25-basis point hike on Aug. 10 - despite some...

UBS brings first synth muni CDO.(Collateralized debt obligation)
July 26, 2004... UBS Financial Services within the next month expects to close the first visibly rated synthetic municipal collateralized debt obligation. The deal, a $105.07 million portfolio of credit default swaps known as Alpine III, is a pooling of hedged...

Fannie Mae frets over credit risk.
July 26, 2004... Aside from reporting higher-than expected earnings and lowering guidance for the remainder of the year, Fannie Mae last week discussed its decision to grow its portfolio in the second half of the year via lower-margin ARMs. The firm also...

Card supply could rebound as issuers refi maturing deals.
July 26, 2004... With credit card ABS supply down in the first half - due primarily to pending M&A activity - Standard & Poor's anticipates a new issue supply rebound in the second half, reaching $65 billion. With just $27 billion in supply pricing over the...

Intellectual property ABS waiting in the wings.
July 26, 2004... NEW YORK - Rumor and innuendo notwithstanding, the intellectual property securitization sector has been quiet for the past year. However, market participants are talking up a comparatively vigorous pipeline, including a pharmaceutical...

U.S. ABS primary springs back with $18 billion week.
July 26, 2004... The U.S. ABS primary market sprung back to life last week, with more than $18.5 billion shopped to investors, covering the four main asset classes. As of press time Thursday, with a few lingering home equity transactions slated for a Friday...

Letter of credit linked notes emerge for Consolidated Natural Gas.(Brief Article)
July 26, 2004... A structure designed to add some extra powder to the letter of credit capacity keg of energy providers has emerged in the private market off the Deutsche Bank Securities desk in New York, sources said. Deutsche Bank New York is the issuer...

Robust European loan mart promotes CLO issuance.
July 26, 2004... With European loan volume so far in 2004 at an all-time high - 35.4 billion for the first half of this year - the pipeline for European collateralized loan obligation (CLO) issuance is stronger than ever. Four European CLOs were completed in...

Mortgages rally following Greenspan report.
July 26, 2004... Mortgages were on hold until late last Tuesday afternoon as the market waited for Fed Chairman Alan Greenspan's semiannual report to Congress. The Treasury market rapidly sold off following his comments suggesting that the FOMC was still on...

CMBS upgrades exceed downgrades in second quarter.(Grade)(Commercial Mortgage Backed Securities)(Brief Article)
July 26, 2004... The second quarter of 2004 recorded the second-highest CMBS upgrades ever in a three-month period, according to Standard & Poor's. In addition, the period recorded the lowest number of downgrades since 3Q01. Overall, S&P said there were 155...

Movements in interest rates affect mortgage performance.
July 26, 2004... With the recent volatility in interest rates - most apparent as the 10-year neared the 4.35% level - MBS performance has become subject to the direction of rates, said analysts. With falling rates, spreads are expected to be hit hard, while as...

Lehman asks: Is there cause for concern in IO hybrids?(interest only)(Brief Article)
July 26, 2004... Although it is clear that payments on IO loans will rise at the reset date, whether borrowers have the ability to meet the adjusted payments is a matter of concern. Last week, Lehman Brothers noted that nominal changes in payments could be...

Asia rife with activity, as Singaporean REITs issue CMBS.
July 26, 2004... Most of the buzz in Asia last week centered on Singapore, as two of the city-state's real estate investment trusts (REIT) launched CMBS transactions. CapitaMall Trust (CMT), the REIT established in 2002 by the property company CapitaLand, is...

FSA new regulatory policy for U.K. insurance holding pressures triple-B spreads.
July 26, 2004... Market dynamics for triple-B rated paper could be impacted by the new streamlined risk-based capital regime for insurance companies released by the U.K. Financial Service Authority (FSA). According to press statement released by the FSA...

European market still open for business.
July 26, 2004... The European market was still busy last week, with last-minute additions to the busy calendar ahead of the anticipated quiet of the August repose. The pipeline grew by a few transactions, offering a preview of action reserved for September...

RMBS swept aside by covered bonds, in Basel II.(Residential Mortgage-Backed Securities)
July 26, 2004... While the Basel Committee may be done with its guidelines, industry players continue to sort out the potential effects of the new rules. One recurring theme is the increased use of covered bonds, as RMBS risk weighting may become less...

Activity improves for sureties in the 2Q04.
July 26, 2004... The monoline guarantors enjoyed a pickup in business in the second quarter, thanks to marginally, albeit temporary wider credit spreads - particularly at the triple-A level - and an increase in volume from asset classes that are traditionally...