Asset Securitization Report articles from March 2004

Asset Securitization Report archives from March 2004

Whispers.
March 1, 2004... Arrow Financial Services recently closed its first deal since the third quarter of 2002, a $40 million, self-brokered securitization of consumer debt. Arrow's deals are typically backed by a hodgepodge of assets, such as charged-off utility...

Merrill equity stake in CompuCredit has upside for both.
March 1, 2004... Merrill Lynch has an ace up its sleeve with a recent agreement to provide liquidity to CompuCredit Corp. in return for a potential equity stake in the company. The new relationship also gives Merrill a quality specialty servicer for future...

Cowboys teach Colombians a lesson.
March 1, 2004... Those driven mad by a cow securitization program in Colombia might soon regain their sanity. The 20th and last series, sized at about Ps6 billion (US$2.2 million), is likely to pay out in full in a couple of months despite severe trauma,...

CIBC to let U.S. conduits wind down.
March 1, 2004... The fates of the two U.S. ABCP conduits administered by CIBC World Markets are still in question, though apparently CIBC is retaining the staff necessary to keep the conduits on course for natural amortization as the underlying facilities...

Citigroup "minds the gap" once again.
March 1, 2004... While investors scour the couch cushions for yield, the stronger rally seen in the corporate unsecured market does create opportunities. In its third installment of tracking ABS versus unsecured debt spreads, Citigroup Global Markets assesses...

Jacko "Bowie Bond" sale highly unlikely, despite reports.
March 1, 2004... Despite reports that beleaguered pop star Michael Jackson may attempt to securitize his song catalog in a "Bowie Bond" like offering in last week's New York Daily News, sources see the culmination of such an offering unlikely. Citing an...

U.S. ABS supply picks up after short week.(asset backed securities)
March 1, 2004... A monster week of ABS supply hit the U.S. primary market last week, following the shortened week of trading the prior week. As of last Thursday's close, with $16.5 billion having priced on the week, the market was awaiting a few more pricings -...

Oncor 2004 taking longer than expected.
March 1, 2004... Since mid-January, Oncor Electric has been in the planning stages for its second-ever stranded cost ABS, following its successful series 2003-1 transaction that priced last August. But despite its previous transaction setting the benchmark for...

ABCP volume barely over $700 billion.(asset-backed commercial paper)
March 1, 2004... Despite reports of increased origination activity, outstanding asset-backed commercial paper continued to slide last week, declining to just $1.4 billion above the $700 billion threshold, according to Wednesday numbers provided by the Federal...

Rumor mill churns out franchise fodder.
March 1, 2004... Rating agencies are reporting increased chatter from bankers concerning the franchise sector. "There is certainly a buzz right now; we have received a flurry of calls," said Fitch Ratings analyst Adam Kaplan. "Bankers are taking our...

Q&A: Barclays' MD Wade discusses plans for SABR shelf.(Interview)
March 1, 2004... With the successful pricing of its first home equity principal finance transaction, SABR 2004-OP1, Barclays Capital became the latest investment bank to toss its hat into this arena of the home-equity market. Barclays Managing Director Michael...

February closes out on quiet flows.
March 1, 2004... Mortgage activity last week was uneventful and uninspiring. Originator selling averaged about $1 billion per day and was mostly in 5.5% coupons. Investor activity was mixed with profit taking by money managers and banks in higher coupons moving...

Influx of ARMs boosting loan sizes.(Adjustable Rate Mortgage)
March 1, 2004... Larger loans have been appearing more frequently in the Mortgage Bankers Association (MBA) weekly surveys. Some analysts say that this reflects the greater percentage of adjustable-rate mortgages in the surveys. As ARMs tend to have...

Greenspan speaks, and the debate on Fan and Fred changes face.
March 1, 2004... Last week, Federal Reserve Chairman Alan Greenspan delivered a double whammy to Fannie Mae and Freddie Mac. Speaking before a group of credit union executives on Monday, he questioned whether fixed-rate mortgages - a staple Freddie and...

Ginnie's new disclosures reveal limited prepay differentials.
March 1, 2004... Ginnie Mae's additional disclosure data on Federal Housing Authority (FHA) single-family pools has shown just slight prepayment variances in characteristics that generally change the convexity profiles of specified pools. Ginnie has begun...

Citi becomes latest global bank to enter Mexico RMBS.(Residential Mortgage-Backed Securities)(Hipotecaria Nacional)
March 1, 2004... Snags mandate from top Sofol Hipotecaria Nacional In the latest sign that international players new to the Mexican housing sector are keen to grab a share of the nascent RMBS market, Citigroup has won a mandate from Hipotecaria Nacional,...

Are U.K. self-certified mortgages too vulnerable?
March 1, 2004... The Financial Service Authority recently launched an investigation into U.K. self-certified mortgages, following a British Broadcasting Corp. program that highlighted an increase in fraudulent claims. According to the BBC findings, a large...

Better arbitrage opportunity for synthetic structured finance CDOs.(Collateralized debt obligations)
March 1, 2004... Up until now, synthetic CDO technology has been predominately applied to corporate assets. With market fundamentals shifting, arrangers will more aggressively explore opportunities to apply this technology to structured finance assets, analysts...

Prices continue to hold as pipeline builds for March calendar.
March 1, 2004... With the lack of substantial February volume, deals priced well within initial guidance. Many were oversubscribed and revised to reflect the strong investor demand. The healthy March pipeline continues to grow and may offer buyers some respite...

Whispers.
March 8, 2004... ABS pros at Banc One Capital Markets expect to hear sometime this week about their future within the post-merger JPMorgan Chase/Bank One Corp. entity. Despite JPMorgan Chase's role as acquirer in the transaction, many remain hopeful that...

Taiwan hits a homer with the country's first RMBS deal.
March 8, 2004... Taiwan closed its first residential mortgage-backed securitization last week, and sources say at least two more are on the way. It is the start of what some believe could be a busy year for the developing asset-backed market in that country....

Edison ends an era The largest ABCP conduit is no longer funding.
March 8, 2004... As if symbolic of the ABCP industry's woes over the past two years, the market's titan conduit, Edison Securitization Corp. - which peaked in size at nearly $40 billion - officially stopped funding new assets, according to GE Capital Corp.'s...

Brazil FIDCs go on U.S. tour.
March 8, 2004... At least one Brazilian investment bank, boutique outfit Hampton Solfise, has begun to promote domestic currency-denominated receivables investment funds (FIDCs) among U.S. investors. Recently hired as a Hampton director, Stephen Taber went on a...

GMAC quietly closes first CMBS servicer advance fee deal.
March 8, 2004... GMAC Commercial Mortgage Corp. recently christened a new asset class when it became the first to securitize its CMBS servicing advance fees. The $119 million offering is comprised of $112 million in class A notes rated Aaa' by Moody's...

ABS market ponders historically tight spreads.
March 8, 2004... As ABS spreads approach their underlying benchmarks, and value becomes increasingly scarce, sell-side researchers have diverging views on relative value, and what strategy investors should employ. For the first time since mid-2002, some banks...

IP guarantor wraps first deal.
March 8, 2004... IP Innovations Financial Services, a start-up guarantor of loans secured by intellectual property, recently closed its first deal, wrapping a small term loan (less than $10 million) to ATD Corp. for the benefit of lender GMAC Commercial...

Diversity of assets seen in U.S. ABS primary.
March 8, 2004... A well-bid and fast-paced session of primary supply was seen in the U.S. ABS market last week. Bolstered by a massive global RMBS deal, which accounted for roughly half of the volume, the market saw $21.5 billion of new-issue ABS price, with a...

Metris defuses with defeasement.
March 8, 2004... In the wake of its long-awaited earnings restatement last week, The Metris Companies seems to have found a strategy to navigate the maturing ABS obligations that have worried analysts and investors throughout last year. By announcing the second...

Chargeoffs up, delinquencies down for DVI ABS post-transfer.
March 8, 2004... Reports "unreconciled" cash surplus, shortfall... Collateral performance for the eight outstanding securitizations from DVI Inc. rebounded in the latest reporting period, following the previous month's servicing transfer to a unit of US...

Money market tranches sparks new CDO league considerations.
March 8, 2004... The trend toward financing CDO senior tranches in the short-term market has led to classification challenges, especially for this league table-savvy market. The Bond Market Association has been assessing the situation and plans to release...

Despite a positive outlook, signs of trouble loom in CMBS.
March 8, 2004... The CMBS credit story is solid for 2004, said Patrick Corcoran, head of mortgage research at JPMorgan Securities, who named the sector the premier safety play for the year. But is trouble up ahead? "The big theme in 2004 is the safety play...

Steady two-way flows ahead of employment and prepayment reports.
March 8, 2004... The mortgage market saw active two-way flows last week. Good buying was noted from hedge funds, servicers, banks and arb accounts. Originator supply was less than $1 billion per day early in the week, but bankers hit the street with more than...

Don't count CMOs out yet, as they might be here to stay.
March 8, 2004... The CMO machine is riding slower this year versus 2003, as CMO production plummeted to a monthly average of $20 billion so far compared with $40 billion last year. However, analysts remain optimistic that CMO production will pick up going...

House price numbers may be inflated, analysts say.
March 8, 2004... F reddie Mac reported last week that home price growth for the fourth quarter of last year increased significantly over the previous quarter, growing at an annualized rate of 17.8% nationwide - a number not seen since 1976. However,...

Spain streamlines insolvency legislation, more in line with European view.
March 8, 2004... The new Spanish insolvency legislation to be implemented in September promises to have a more creditor-friendly view, similar to other European jurisdictions, which should provide the legal certainties necessary for the Spanish securitization...

New home decree on purchases in SCIP threatening but not fatal, S&P says.
March 8, 2004... A new legislative decree that discounts the prices on property units securitized in the Italian government-sponsored SCIP 2 real estate deal should not impact payment collections, says Standard & Poor's. The rating agency does not foresee any...

Hong Kong toll road deal coming soon.
March 8, 2004... Hong Kong is moving forward with its plan to securitize revenue from five government toll roads and one bridge, having settled on which banks will arrange the deal. Citigroup Global Markets and HSBC Securities won the assignment. Frederick...

European deals maintain tightening trend.
March 8, 2004... Through the first week of March, ABS volume in the international market is about 17 billion ahead of last year's pace, by most estimates, with year-to-date issuance at approximately 41.4 billion (US$50.5 billion). The mountain of supply,...

Pao de Acucar undergoes manager switch, other changes.
March 8, 2004... The structure of Brazilian receivable investment fund (FIDC) Pao de Acucar has gone through changes that illustrate the flexibility of a vehicle that is fast gaining ground. A shareholders' meeting on Feb. 18 decided to increase the...

Mexico's CFE reopens CLO.
March 8, 2004... Mexican state-owned power company Comision Federal de Electricidad (CFE) reopened a conduit program backed by loans extended by ING Barings, which is also lead on the transaction. The CFE issued Ps665 million (US$61 million) at a yield of 61...

Argentine deals liven up lazy summer.
March 8, 2004... Offering a flicker of activity during a typically lethargic summer, two deals closed in Argentina's domestic market on Feb. 25. In the export sector, Banco de Valores led Secupyme V, a US$2.7 million transaction for a collection of 24 bean, soy...

Brazil hydro-monster Furnas extends tentacles into FIDCs.
March 8, 2004... The appeal of receivables investment funds (FIDCs) has galvanized one of Brazil's monster power companies into action, according to sources. Executives at hydroelectric producer Furnas Centrais Eletricas have been talking to local media and...

You can't price through C-BASS.
March 8, 2004... While spreads are tightening across the board for structured finance CDOs, Credit-Based Asset Servicing and Securitization, or C-BASS, stumped the whole sector with its most recent real estate-backed deal, a unique repackaging of double-B and...

Post-reinvestment period reinvesting.
March 8, 2004... By Natasha Chen, vice president/senior analyst, Moody's Investors Service Increasingly, CDO managers seek the flexibility to continue reinvesting after the reinvestment period has ended. Reinvestment is generally limited to unscheduled...

Whispers.
March 15, 2004... Asset-backed CP outstandings have rebounded in the first two weeks of March, totaling $715 billion as of last Wednesday, according to data maintained by the Federal Reserve. This follows two and a half months of declines, in which outstandings...

Rally pushes refis near the brink.
March 15, 2004... In a week that was called "violent" by some analysts, refinancing risk has once again reared its ugly head. Last week's rally has altered the prepayment and supply outlook for the sector by placing primary mortgage rates within 25 basis points...

Daiwa brings first equity CDO.
March 15, 2004... Japanese investors are perusing what is believed to be the first-ever rated CDO that is entirely linked to equity default swaps. Sources said similar transactions are already in the works from other issuers in Asia and Europe. The...

Caixa's retail bid stirs resentment.
March 15, 2004... By trying to endear itself to retail investors, Brazilian state bank Caixa Economica Federal has irritated bankers. Caixa officials have been talking to the local press about securitizing mortgages to low-income borrowers. As a vehicle, Caixa...

CDO collateral managers removing old incentive fees.
March 15, 2004... Some CDO collateral managers have restructured their existing management fees to remove any performance-based compensation, so that they can avoid consolidation under Financial Interpretation No. 46-R. Last week, Lincoln National Corp....

Alt-A lender Homestar fulfills promise with inaugural deal.
March 15, 2004... Homestar Mortgage recently completed its first term securitization backed by $308 million of Alt-A mortgages and underwritten by Citigroup Global Markets, according to records filed with the Securities and Exchange Commission. This transaction...

MBIA adds office in Milan.
March 15, 2004... After probing the territory and determining opportunity, MBIA has opened an office in Milan, Italy, headed up by Luigi Stefano. Stefano will focus on Italy and Greece. The international effort is led out of MBIA's London office, under the...

Correction.
March 15, 2004... In the 3/08/04 issue, ASR incorrectly reported Litton Loan Servicing as the parent company of C-BASS, when in fact C-BASS is the parent company of Litton.

Ain't nothing going on but the mortgage.
March 15, 2004... The U.S. ABS primary market had a respectable, if somewhat limited, week of new issue supply, pricing roughly $11 billion in primarily mortgage ABS. Aside from home equity, auto loan and student loan ABS were the only other options investors...

Fitch finds downgrade, default stability.
March 15, 2004... Downgrades in the term ABS market appear to be stabilizing, while upgrades have increased on a comparative basis, according to a new monthly ratings-action study published by Fitch Ratings. The inaugural edition of Fitch's Term ABS Credit...

What is an Equity Default Swap?
March 15, 2004... An Equity Default Swap (EDS) is a derivative contract between two parties - a protection buyer and a protection seller - whereby the former has the right, in exchange for the regular payment of a premium (fixed payment), to receive from the...

Investors open wallets to secondary market, but why?
March 15, 2004... CDO spreads are tight and a shortage of new issuance supply has helped drive investors into the secondary CDO market over the past year. But, according to market sources, a confluence of other events has helped spur that activity as well. ...

Moody's next to offer non-mortgage servicer ratings.
March 15, 2004... In what may be the next arena of expansion for the rating agencies, Moody's Investors Service has assigned its first servicer rating for a non-mortgage entity. As was the case when rival Standard & Poor's launched its non-mortgage servicer...

CDO conference catches market's drastic changes.
March 15, 2004... A more mature market basking in the benefits of increased transparency. The birth of fluid, secondary trading. Fresh new asset types and improved structures. These were the mantras of IMN's annual New York-based CDO conference last week. ...

Keynote notes and conference chatter.
March 15, 2004... Merrill Lynch's Christopher Ricciardi, who heads the firm's global structured credit products group, had some choice words for dealers competing in the CDO market: put up or shut up. With heightened market transparency efforts linked to...

Is there safety in structure when structures can change?
March 15, 2004... Investors in asset-backed securities have had a crash course in distressed scenarios over the past few years, beginning with, perhaps, the collapse of Heilig-Meyers in late 2000, the messy servicing transfer that followed and the ultimate...

Convexity and prepayment fears jump on rate decline.
March 15, 2004... Since the February employment report, the yield on the 10-year has fallen 30 basis points. For the mortgage market, this has dramatically increased prepayment and convexity fears - and investors responded accordingly last week by moving down in...

CSFB releases CMBS Index.
March 15, 2004... Credit Suisse First Boston recently launched an investment-grade CMBS index covering new issuance to be priced daily by the firm's trading desk. In order to provide a more liquid and consistent product, the index will only track a deal for...

Nationwide pushes for lower stamp duty, easing cost for U.K. first-time buyers.
March 15, 2004... U.K. mortgage lender Nation- wide last week pled with the government to raise the stamp duty threshold for first-time buyers. As it stands today, soaring house prices means the number of first-time buyers required to shell out the additional...

House of Lords makes ruling in favor of whole business deals.
March 15, 2004... A new ruling issued by the House of Lords last week places holders of floating charges in a senior position over insolvency-related expenses, including liquidators' costs. The ruling distinguishes between floating charges - where a particular...

Euro ABS spreads hold tight; market players wonder for how long?
March 15, 2004... While spreads for The Permanent Financing No. 4 reached the tightest pricing levels among any U.K. MBS seen this year, how long the tightening bias will continue is a matter of speculation. Some market players are hoping that with this deal...

Chile swings into action with credit cards, auto loans and more.
March 15, 2004... The Chilean summer is winding down and dealmakers are back in force. ABN Amro Securitizadora is aiming to run a credit card deal through the market in mid-April - its first foray into this still-emerging asset class - according to a source on...

Bringing together three malls, Mexico's GICSA prices.
March 15, 2004... The real estate market in Mexico continues to break new ground. Having cut its teeth in the sector with an issue for housing finance company Hipotecaria Nacional only last December, Santander Investment last week led a deal that is being touted...

Argentine consumer sector rolls out more deals.
March 15, 2004... Argentina's consumer sector continues to churn out news. Moody's Investors Service assigned a Aa2.ar' rating on the national scale to the senior piece of a personal loan- backed deal originated by regional bank Banex. The total volume of the...

Fitch Ratings brings local LatAm analyst to Chicago.
March 15, 2004... Fitch Ratings is shuffling around some of its Latin American people to reflect shifting activity in the region. In May, Matias Acevedo, a senior director in the Chile office, will join the three-person team in Chicago responsible for the...

Whispers.
March 22, 2004... The post-merger JPMorgan Securities/Banc One Capital Markets securitization banking team will be headed jointly by Banc One managing director Christine Cole and JPMorgan MD Scott Davidson, according to an internal memo circulated last week....

Amid rally, Street still likes five-year HEL.
March 22, 2004... The cheapness in five-year fixed-rate home equity ABS has narrowed early this year, sparking debate as to whether any potential extension risk is worth the spread pickup. Since five-year home equities widened to over 90 basis points over Libor...

Colombia agency tackles NPLs.
March 22, 2004... Colombia's main mortgage securitizer is set to chip away at the mountain of non-performing loans that has burdened the country's banks since the '90s. Roughly a year after announcing its plans, Titularizadora Colombiana expects to issue the...

On with ABCP, especially in Europe: Accountants no longer the Fonzies at ABCP gatherings.
March 22, 2004... Shrugging off a year of relative inactivity, ABCP market participants are hopeful, if not optimistic, that the sector will begin growing again in 2004, now that many of the past year's concerns are being flushed through the market. Roughly...

MMCA story improving.
March 22, 2004... Despite ratings volatility and concerns over near-term ABS coming due, the outlook on Mitsubishi Motors Credit of America (MMCA) retail auto ABS is not as grim as it appeared a year ago, according to research from Barclays Capital. The...

Legacy adds some life to the market.
March 22, 2004... Legacy Benefits Corp. recently closed what may be the first true senior settlements securitization, a $70 million transaction led by Merrill Lynch. In all, $61.5 million of class A notes were rated A1' and $8.5 million of class B notes...

U.S. ABS market slows to $8.3 billion.
March 22, 2004... Primary U.S. ABS issuance slowed last week, to the tune of $8.3 billion, as the focus on mortgage ABS continued. With the credit card sector accounting for under $1 billion and auto-related supply just topping $1 billion, the home equity sector...

Blackstone bypasses loan market with CMBS.
March 22, 2004... The Blackstone Group has decided to bypass the bank loan market to finance its $3.1 billion acquisition of Extended Stay America. Instead, the private equity firm is financing the hotel chain buyout with commercial mortgage-backed securities...

UBS to push into autos, cards.
March 22, 2004... Nearly two years after re-entering the U.S. ABS market, UBS will look to expand its business throughout 2004, moving into the auto loan and credit card sectors of the market. Known primarily for its mortgage-related and CDO presence, UBS is...

First-time issuer NorthStar maps student loan ABS plank.
March 22, 2004... With its first-ever term Libor floater under its belt, nonprofit student lender NorthStar Capital Markets is the latest name in the rapidly growing sector. But unlike some new entrants, NorthStar plans on a more tempered approach to...

Aeltus rating actions.
March 22, 2004... Moody's Investors Service withdrew its rating on $152 million in senior notes and $19 million in second priority senior notes, due Dec. 12, 2008, issued by Aeltus CBO Limited, a CDO that closed in December 1996. The withdrawal followed the...

CDO money-market CP tranches to continue.
March 22, 2004... Panelists at last week's ABCP conference, hosted by the Strategic Research Institute, expect CDOs and other traditionally term ABS vehicles to continue incorporating short-term instruments into their structures, so long as the funding curve...

Conference Whispers.
March 22, 2004... NordLB has structured the capability to issue ECP into its Hannover Funding ABCP conduit. Hannover can issue in both euro and sterling commercial paper, and intends to do so as a way to mitigate the use of a currency swap when originating...

Forward thinking with "backward induction".
March 22, 2004... By Andrew Davidson, President, Andrew Davidson & Co., Inc. Andrew Davidson & Co., Inc. has developed several enhancements to its current MBS analytical capability, which could change the landscape of mortgage analysis. The three main...

Specified pools are the way to go with renewed refi fears.
March 22, 2004... With the threat of another refinancing wave looming, investors are eyeing specified pools for prepayment protection. Investors also see the pools as a way to improve the carry for already refinancable pools. These pools, said analysts,...