Asset Securitization Report articles from March 2005

Asset Securitization Report archives from March 2005

Whispers.(briefs)
March 7, 2005... Barclays Capital head of ABS trading Sue Aldworth recently resigned from her position and she is reportedly heading to work at a hedge fund named Ischus, sources said. Additionally ABS trader Raphael Gonzalez also resigned from Barclays and is...

China MBS becoming a reality.(mortgage backed securities)
March 7, 2005... China Construction Bank, one of the People's Republic of China's Big Four state-owned commercial banks, looks increasingly likely to launch its long-awaited pilot MBS in the first half of the year, sources familiar with the deal said last week....

Do triple-A HELs still offer value?(home equity loans)
March 7, 2005... Even as spreads on home-equity ABS reach dizzyingly tight levels, analysts are still touting them as the best place to find relative value in the ABS market. As always, the question remains just how tight spreads can come in. The answer, for...

MSKCC plans $250 mln drug royalty sale.(Memorial Sloan-Kettering Cancer Center )
March 7, 2005... Memorial Sloan-Kettering Cancer Center is gearing up to sell a $250 million piece of its future foreign patent royalties from cancer treatment drug Neupogen/Neulasta. Among the likely bidders are several firms with a history of securitizing...

Fitch plans to rate more middle-market CLOs amid robust issuance.(collateralized loan obligations)
March 7, 2005... To paraphrase the late crooner Frank Sinatra, Fitch Ratings expects 2005 will be "a very good year" for middle-market CLO issuance, as the agency is gearing up to rate more transactions in the relatively young asset class. Fitch warned,...

Primary ABS market rebounds to price $9.5 billion.(asset backed securities)
March 7, 2005... The primary U.S. ABS market made a return to loftier volume levels last week to price close to $9.5 billion as of Thursday's market close. The real estate sector made up the bulk of total volume with $6.5 billion in new issues. Delta...

Mitsubishi offers value in auto sector: Sales, servicing questions remain...(Mitsubishi Motors Corp.)
March 7, 2005... Mitsubishi Motors' senior bonds may be one of the few places relative value still exists in the overbought ABS market, but questions about servicing and the strength of U.S. operations still loom for the auto manufacturer. If Mitsubishi can...

DBRS preps to make mark on ABCP.(asset backed commercial paper)(Dominion Bond Rating Service)(Brief Article)
March 7, 2005... Canadian interloper Dominion Bond Rating Service is primed to rate its first U.S. ABCP program, and will be staffing up during the coming weeks to prepare. "We are looking at one proposal in the single-seller area and two proposals in the...

New issuer taps ABS market with drug royalty collateral.(asset backed securities)(Brief Article)
March 7, 2005... Canadian company Drug Royalty Corp. is showing the market $42 million in single-A rated notes backed by pharmaceutical patent royalties. What the market isn't seeing - the pre-sold triple-B and double-B rated tranches - makes this the first...

S&P survey confirms concerns of operational risk.(Standard & Poor's Corp.)
March 7, 2005... Based on the results of a recent Structured Finance Market Opinion survey conducted by Standard & Poor's, securitization professionals named operational risk as the second most significant factor that is likely to affect the outcome of a deal,...

Sell-off rattles MBS market, while hoping employment report will calm.(mortgage backed securities)
March 7, 2005... A strong sell-off last Monday on inflation concerns sent the mortgage market reeling as the 10-year Treasury yield surged past 4.30% and closed in on 4.40%. The sell-off was fueled in part by mortgage participants lengthening their portfolio...

Relative value observations in CMBS.(commercial mortgage backed securities)
March 7, 2005... The CMBS market has been in high demand in 2005 with the triple-A 10-year sector tightening five basis points since the end of last year on a swaps basis and eight basis points versus Treasurys. This has the sector trading close to fair value...

Ginnie Mae securitizes first rural housing loan.
March 7, 2005... On February 18, the first Ginnie Mae securitization of the Department of Agriculture's Rural Housing Service Section 538 loans came to market. Plans for this type of securitization was first reported two years ago in ASR (see ASR 03/31/03). The...

UBS examines drivers of mortgage losses.(Union Bank of Switzerland)
March 7, 2005... In its most recent Mortgage Strategist, UBS examined potential mortgage market losses, looking specifically at such drivers as foreclosure and loss severity. In the study, analysts focused on subprime loans as the sector is more sensitive to...

Fannie's capital restoration plan calms fears of massive MBS selling.(mortgage backed securities)(Federal National Mortgage Association)
March 7, 2005... With Fannie Mae's recent announcement of its capital plan, fears of a "massive MBS selling" have been alleviated. Analysts said that Fannie's portfolio runoff seen in January exceeded the amount needed for the capital plan, and was more a...

More spread tightening this year with limited supply to go around.
March 7, 2005... As the market nears the end of the first quarter 2005, European volume is down by about 30 billion ($39.4 billion) when compared to year-over-year issuance volumes of 2004. Market estimates put year-to-date volumes at 27 billion, but analysts...

Subprime MBS lending intensifies in the U.K.(Mortgage backed securities)
March 7, 2005... Should U.K. home prices head south, U.K. non-conforming securitization structures could theoretically weather the storm, given the credit enhancement and structural mitigants of these deals. But at the moment, it's a notion not likely to play...

Hyundai preps return to cross-boarder market.(Hyundai Capital )
March 7, 2005... Hyundai Capital is expected to make a decision early this week on who will arrange its upcoming auto loan-backed private placement. The Korean consumer finance company invited bids in January from a quartet of houses - Calyon Securities, HSBC,...

Japan activity picks up.(financial markets)(Brief Article)
March 7, 2005... There has been plenty of activity in Japan thus far in 2005, to keep market participants happy. Last week saw the launch of an RMBS from UFJ Bank, synthetic arbitrage CDO put together by Daiwa Securities, equipment-lease deal by Showa Leasing...

Whispers.(briefs)
March 14, 2005... BNP Paribas hired Stacey Mitchell to head its New York-based U.S. ABS syndicate desk. Her title will be Director. Mitchell had worked at JPMorgan Securities since its 2001 merger with Chase Securities and had worked at Chase prior to its...

Credit cards prove weak sector in otherwise robust year for supply.
March 14, 2005... While most ABS sectors have so far equaled or outpaced their 2004 year-to-date issuance volumes, the credit-card sector has been conspicuously absent from the party with less than one-third of the issuance seen at this time last year. While...

CenterPoint preps $1.9 bln RRB.(CenterPoint Energy Inc.)(securitization)
March 14, 2005... The Public Utility Commission of Texas approved CenterPoint Energy Inc.'s request to securitize up to $1.8 billion in stranded cost ABS last week, clearing the way for a deal which the issuer hopes will occur as soon as possible. Some hurdles...

A.M. Best new kid on rating agency block.
March 14, 2005... After being granted the status of a Nationally Recognized Statistical Rating Organization by the Securities and Exchange Commission last week, A.M. Best Co. intends to penetrate the securitization and banking arenas, while plans to broaden its...

WestLB leads first SBA deal for BLX.(Business Loan Express)(Small Business Association loans)(Brief Article)
March 14, 2005... Business Loan Express priced a $102 million offering backed by the non-government guaranteed portions of Small Business Association loans - dubbed SBA 7a loans - with WestLB making its debut as lead manager on a BLX transaction. Previously,...

U.S. ABS primary just shy of $10 billion.(asset backed securities)
March 14, 2005... The U.S. primary ABS market had another bustling week to once again price upwards of $9.3 billion as of Thursday's market close, with the home equity sector accounting for $5.5 billion of new-issue volume. With the heavy new issue calendar...

Moody's sees CDO impairments declining.
March 14, 2005... High yield CBOs - which comprise less than one-quarter of the broader CDO universe - accounted for close to three-quarters of materially impaired securities in the U.S. CDO sector between 1993 and 2003, according to a report from Moody's...

Slow going for ABS job seekers.(asset backed securities)(Brief Article)
March 14, 2005... Headhunters are reporting a lackluster February, and some sources attribute this to a scarcity of new job openings in the ABS market. The only bright spot appears to be in the hedge fund universe, where there is a healthy demand for people...

Encore taps market for first time with $1.6 billion deal.(Brief Article)
March 14, 2005... Following its recent equity IPO, Irvine, Calif.-based lender Encore Mortgage Corp. came to market with its first stand-alone securitization last week, a whopping $1.6 billion home equity deal last week. The all floating-rate deal was issued...

Hibernia acquisition could dampen Cap One CCABS volume.(Capital One Financial Corp.)
March 14, 2005... Last week Capital One Financial Corp. announced plans to acquire New Orleans-based retail bank Hibernia Corp. for $5.3 billion, and though the move will undoubtedly give Capital One more liquidity and funding access, there is doubt as to what...

Strong convexity-related selling as 10-year rises to 4.52%.
March 14, 2005... Last week was another rough one for mortgages. The outlook at the start of the week seemed very favorable following the employment report rally with the 10-year back in its range - though at the high end. In fact, Monday saw good buying from...

The BMA tests the waters for TBA hybrid ARMs.(To Be Announced)(adjustable rate mortgages)(Bond Market Association)
March 14, 2005... The Bond Market Association recently held a conference call with MBS dealers and originators to discuss the creation of a hybrid ARM TBA program. After previous attempts have proved unsuccessful, analysts from dealerships said that investors...

MBA releases report on minimum servicing.(Mortgage Bankers Association)
March 14, 2005... The debate on the appropriateness of the minimum servicing fees established by Fannie Mae and Freddie Mac - currently at 25 basis points - is heating up (see ASR 1/10/05). In this light, last week the Mortgage Bankers Association released a...

Aussie RMBS market continues to capture Europe's attention.(residential mortgage backed securities)
March 14, 2005... Australian RMBS market fundamentals are not too far off the mark when compared to the story in Europe, which could be making European investors more comfortable with buying these deals. "Margins have come in quite a lot for Australian RMBS...

Slight impact for BBC-related CMBS.(commercial mortgage backed securities)(British Broadcasting Corp.)
March 14, 2005... Standard & Poor's said last week that the U.K. government green paper reviewing the British Broadcasting Corp.'s Royal charter will have no impact on the two CMBS transactions tied to the BBC name. The government said it would renew the...

Europe maintains tightening bias, but for how long?(Residential Mortgage-Backed Securities)
March 14, 2005... New tights were set for Euro RMBS with last week's pricing of Dutch RMBS, Arena 2005-1 B.V. The 983 million ($1 billion) broke through the record lows set by Dutch RMBS HERME 9, which priced in early February. The double-A and senior and...

Korea Air to benefit from improving Korean sentiment.
March 14, 2005... Korea Air Lines, the country's largest air carrier and part of the Hanjin Group, is set to launch its second cross-border securitization via Citigroup Global Markets. The 20 billion ($191.1 million) deal is scheduled to launch and price on...

Thailand preps ABS program.
March 14, 2005... It increasingly looks likely that the Government of Thailand will follow the example of its peers in Hong Kong and Malaysia by tapping the securitization markets. Reports emerged last week from Bangkok suggesting that the Thai Ministry of...

Trio of Japanese deals queued.(Brief Article)
March 14, 2005... Nippon Shinpan, one of Japan's most regular securitizers and biggest consumer finance companies, is tapping the market again with a 45.6 billion ($438.3 million) offering. The deal, launched out of the Ann Funding SPV, is backed by a pool of...

First Singapore deal of 2005 lined up.(Commercial Mortgage Backed Securities)(Suntec Real Estate Investment Trust)(Brief Article)
March 14, 2005... After 2004's record volumes, the lack of any transactions from Singapore in the first couple of months this year has certainly been disappointing. Fortunately, the wait is almost over as Suntec Real Estate Investment Trust is set to launch an...

Whispers.(briefs)
March 21, 2005... BNP Paribas hired MBS passthrough trader Andrew McConnell from RBS Greenwich Capital. In his new position, McConnell will head BNP's New York-based mortgage passthrough trading desk, reporting to U.S. fixed-rate trading head Zbigniew Ryzak....

GMAC floorplan deals see limited widening on heels of bad ratings news.(General Motors Acceptance Corp.)
March 21, 2005... General Motors Acceptance Corp.'s dealer floorplan ABS saw some slight widening in the secondary ABS market last week on the heels of a corporate debt downgrade of both the company and its parent, General Motors. Sources around the market saw...

CMBS standards remain a concern.(commercial mortgage backed securities)
March 21, 2005... With credit spreads tightening and defaults falling by the wayside, CMBS transactions have seen a recent ease in credit and structural protection, causing concern among CMBS market participants. Just last week, research from Nomura Securities...

Patience pays off for HSBC in Malaysia.(HSBC Holdings PLC)(contracts)
March 21, 2005... After one of the most drawn-out mandate processes in Asian securitization history, Cagamas, Malaysia's state-run secondary mortgage agency, has finally selected arrangers for its planned Islamic MBS. HSBC beat off bids from Deutsche Bank...

Bear Stearns launches mortgage index.
March 21, 2005... Bear Stearns unveiled its mortgage performance index to investors last week, and will be releasing the report on a quarterly basis going forward. Electronic updates will be published monthly, company officials said. The index tracks...

U.S. ABS primary volume approaches $13 billion mark.(Asset backed securities)
March 21, 2005... The U.S. primary ABS market maintained momentum last week pricing close to $10 billion for the third consecutive week. Real estate ABS accounted for roughly one-third of total new issuance. Additionally, as of Thursday's market close, just over...

Fitch adds student loans to servicer ratings: First due out by mid-year...more to follow.
March 21, 2005... Fitch Ratings is in talks with a large student-loan servicer in preparation for issuing its first servicer rating by the middle of 2005, although Fitch analyst David Hartung declined to name the servicer, saying only that it is one of the...

Aircraft ABS secondary levels dogged by headlines.(enhanced equipment trust certificate)(asset backed securities)
March 21, 2005... Continuing upward pressure on oil prices coupled with disheartening news from Delta Airlines in its 10-k dinged aircraft ABS bonds in the secondary market last week, a source reported. In its annual report, the legacy carrier said that it...

CDOs: The new real estate play.(collateralized debt obligations)
March 21, 2005... Credit quality is good, but residential mortgage innovations complicate picture After a few years of bruised egos and downgraded corporate bonds, institutional investors opened up their wallets to collateralized debt obligations in...

Bankruptcy reform: It'll get worse before it gets better.
March 21, 2005... Experts across the ABS market agree the latest bankruptcy reform proposal from Capitol Hill will likely cause a rush of bankruptcy filings before the rule actually goes into effect. However, if the credit-card sector can ease through that...

Modest two-way flows as the MBS market tries to find a new range.(Mortgage Backed Securities)
March 21, 2005... It is currently a difficult environment for mortgages as the market tries to find a new range and investors try to gauge potential convexity selling risks. In this situation, mortgages in general will strengthen in a rally and weaken in a...

NAR releases leading housing indicator index.(National Association of Realtors)
March 21, 2005... The National Association of Realtors recently came out with the Pending Home Sales Index, based on pending sales of existing single-family homes, condos and co-ops. The new Index presents data regarding home sales where the contract has already...

MBA reports further decline in delinquencies in 4Q04.(Mortgage Bankers Association)
March 21, 2005... The Mortgage Bankers Association last week released its quarterly survey on mortgage loan delinquencies for 4Q04. As of the end of the year, the seasonally adjusted delinquency rate for mortgage loans on one to four unit residential properties...

U.K. pubs see through the smoke ban.
March 21, 2005... The U.K. pub industry faced several regulatory upheavals in 2004, yet with two deals already priced this year, things are looking up. Industry sources expect a better year for the sector, and maintain that the effects of the new regulations may...

The "future" of negative pledges.
March 21, 2005... By James Patti, partner at Mayer Brown Rowe & Maw, with a focus on emerging markets, including future flow securitizations. U.S. market participants have for some time found ways to address the reality that the desire of debtors to...

Whispers.(briefs)
March 28, 2005... Banc of America Securities has reorganized its structured finance research group, transferring Kumar Iyer and Kenneth Brown to new roles as desk analysts. BofA will now look to build a new research strategy team from the ground up, according to...

Few worries surrounding first early amortization of 2005.(Mellon Bank Premium Finance Loan Master Trust)
March 28, 2005... The ABS market experienced its first early amortization of the year last week, when Mellon Bank Premium Finance Loan Master Trust, Series 2002-1 breached its 5% transferor interest 10-day average trigger, according to records filed with the...

Japan ABS heats up.(asset backed securities)
March 28, 2005... There was plenty of ABS activity in Japan last week. One of the more interesting transactions launched was a massive 120 billion ($1.1 billion) synthetic CLO issued by Sumitomo Mitsui Banking Corp. The credit-linked notes - issued out of...

New CDO utilizing REIT debt debuts.(Taberna Preferred Funding I)(real estate investment trusts)(collateralized debt obligations)
March 28, 2005... The seemingly endless supply of interest in real estate investments struck an opportunistic chord with the creative forces in the structured-finance market, resulting in a brand new CDO that taps REITs. Small and mid-sized REITs, which...

Mortgages, CDOs bolster ABCP outstandings.(collateralized debt obligations)(asset backed commercial paper)
March 28, 2005... NEW YORK - Despite regulatory uncertainty, the ABCP market is currently showing a record $775 billion in outstandings, according to statistics from the Federal Reserve. Growth in the whole loan mortgage sector and increased interest on the part...

New sponsors drive repo finance in ABCP.(asset backed commercial paper)
March 28, 2005... NEW YORK - Investment banks providing repo - or repurchase - funding to clients via the ABCP market are looking for novel structures in order to take these transactions off balance sheet, sources said. During the past year, repo financing...

S&P: Enhanced ABCP outstandings level in 2004.(asset backed commercial paper)(Brief Article)
March 28, 2005... Partially enhanced ABCP outstandings grew 4.3% from the 3Q04 to $601 billion at the end of 2004, consistent with amounts recorded at year-end in 2002 and 2003, according to a new report from Standard & Poor's. This figure has remained constant...

Home equity, autos lead U.S. ABS primary.(asset backed securities)
March 28, 2005... The U.S. primary ABS market priced upwards of $7 billion during the abbreviated week leading into the Easter weekend. Volume was slightly down relative to the three weeks prior, which all saw volume of over $10 billion. The real estate sector...

Analysts spotlight cost of available funds cap on floating-rate HELs.(home equity loans)
March 28, 2005... The available funds cap was the topic of discussion by analysts at Citigroup Global Markets and Morgan Stanley last week, as it has come into focus recently as short-term rates have risen steadily and excess spread on new deals has diminished....

Moody's report hypes auto-loan pool performance measure.(Moody's Investor Service)
March 28, 2005... Moody's Investors Service highlighted its expanded method of calculating net losses in auto loan pools, in a report issued last week. The calculation Moody's uses is an expansion on the traditional method of calculating cumulative net losses,...

Liability bill could spur auto rental and leasing activity.
March 28, 2005... A pending Congressional bill to reform liability laws for automobile rental and leasing companies could boost commercial activity in those sectors and possibly raise ABS issuance volumes as well. The bill may repeal existing vicarious tort...

UCC Capital adds Canadian correspondent office.(Lamerac Financial Corp.)
March 28, 2005... New York-based UCC Capital Corp. added its first foreign correspondent office last week, Toronto-based Lamerac Financial Corp., to focus on originating second-lien loan transactions and whole-company securitizations across all industry sectors....

Fannie expected to shrink its portfolio further going forward.(Fannie Mae)
March 28, 2005... Amidst ongoing pressure to meet its capital requirements, Fannie Mae released its February volume report last week characterized by a smaller retained portfolio as well as a less active guaranty business. MBS sales from its retained portfolio...

MBS convexity hedging needs drop, analysts said.(mortgage backed securities)
March 28, 2005... As rates increase, MBS analysts expect the market's convexity hedging needs to gradually diminish. Servicers are the only group of convexity hedgers that should remain active, MBS analysts report, although this group's convexity needs have...

March prepays expected to rise.(prepayments)
March 28, 2005... March prepayments are expected to rise by two to five CPR as February lows in rates impact prepays just as seasonals are increasing, said Deutsche Bank Securities. For instance, analysts expect conventional 5s to pick up by three to four CPR...

More activity looms in Malaysia.(asset backed securities)
March 28, 2005... The promising start to 2005 in Malaysian ABS is set to continue with more companies last week confirming securitization plans. As with most of the activity so far this year, Malaysian firms are again choosing the Islamic securitization route....