Asset Securitization Report articles from May 2004

Asset Securitization Report archives from May 2004

Whispers.
May 3, 2004... Current Banc One Capital Markets Managing Director and head of ABS research strategy Alex Roever has been named North American head of short-term strategy at the post-merger JPMorgan/Bank One entity. In his new position, he will work from the...

Japan emphasizes transparency in efforts to stimulate market.
May 3, 2004... In an attempt to boost transparency and, ultimately, liquidity in the Japanese securitization market, Bank of Japan (BOJ) will begin releasing a monthly survey of ABS deals, starting in May. The move results from discussions with market...

Off-the-run ABS enjoys the spotlight.
May 3, 2004... During last week's briefing at the Sofitel Hotel in New York, Moody's Investors Service primed investors on what they can expect from esoteric ABS moving forward, aside from delays and protracted lead times. Analysts addressed...

SCIP 2 soft seniors extended: Deal misses full repayment despite cash injection.
May 3, 2004... Having extended the principal repayment for its A1 class, which hit soft maturity last week, the Republic of Italy's SCIP 2 is starting to look like one of global securitization's most tragic comedies, considering how far from course the deal...

Slow and steady, U.S. ABS continues: Ambac wraps three deals...
May 3, 2004... The U.S. ABS primary market continued at its moderate pace versus a typical week in the first quarter, pricing roughly $8.3 billion of new-issue supply. Once again, it was a strong week for student loan ABS, with $3.6 billion of supply, edging...

Next equipment ABS from Marlin in the works.(Asset backed securities)(Brief Article)
May 3, 2004... Marlin Business Services is considering a forward swap arrangement with its investment bank, Deutsche Bank Securities, to lock in the current rates while it preps its next securitization, executives said during Marlin's first-ever quarter-end...

IPO priced, Assured Guaranty moves for triple-A.
May 3, 2004... ACE Ltd. spun off its financial guaranty and reinsurance units in an $882 million initial public offering through a new entity called Assured Guaranty Ltd. The offering takes the financial guaranty unit, Assured Guaranty Corp., one step...

Secondary wraps are big business in the off-season.(XLCA)
May 3, 2004... While the primary CDO market has been largely guarantor-free for the past several months, behind the scenes the monolines are wrapping new issues in the secondary market shortly after close. XLCA guaranteed senior class portions on five...

Investors hold their breath for the jilted Mitsubishi.(MMCA Automobile Trust )
May 3, 2004... Opinions are divided over the reach of the potential fallout from DamlierChrysler AG's decision to withdraw its $6.4 billion equity stake in Mitsubishi Motor Corp., which leaves investors in the automaker's MMCA Automobile Trust securitizations...

BofA applies synthetic MBS technology to auto ABS.
May 3, 2004... With the inaugural offering of CARSS 2004-1, Banc of America Securities did in autos what it successfully pioneered in the MBS market - a synthetic default recourse transaction to bifurcate and sell off the risk of a portfolio of consumer...

A&K Funding closes 2nd BOLI ABS.(bank-owned life insurance)(Brief Article)
May 3, 2004... To minimal fanfare, the second-ever bank-owned life insurance (BOLI) broker-commission backed ABS recently closed. Called A&K Funding series 2004-1, the deal totaled $60 million and was led by sole underwriter Credit Suisse First Boston,...

Fitch sees improving trends, remains negative on subprime.
May 3, 2004... The improving economy has cast a ray of sunshine among Fitch Ratings analysts, who were generally optimistic throughout the firm's quarterly outlook conference call last week. Stronger growth prospects, Fitch said, will contribute to a spike in...

Downgrades continue to slide; 50% dip for ABS alone.
May 3, 2004... Moody's Investors Service found the number of downgrades of asset-backed securities rated by the agency decreased 50% in the first quarter of 2004 compared to the prior quarter, according to its soon-to-be released quarterly update. The data is...

Update on SEC ABS/MBS disclosure project: Contributed by Mark Adelson, head of structured finance research at Nomura Securities.
May 3, 2004... At last week's meeting on disclosure and reporting practices for securitizations, the Securities and Exchange Commission voted unanimously to publish a proposal for comment, which it plans to release this week. The comment period should run for...

A flatter yield curve - now what?
May 3, 2004... With a flattening yield curve on the horizon, MBS market participants are readjusting their expectations for returns. This is particularly true because investors have become used to passthroughs trading in a steepening yield curve scenario, as...

Steady flows despite looming FOMC meeting and employment report.(Federal Open Markets Committee)
May 3, 2004... Mortgages were supported by good buying from a variety of accounts last week as investors stepped up to take advantage of recent widening. The focus was primarily in the lower coupons due to the cheaper levels and concern of increasing supply...

Market welcomes additional information on Freddie Mac pools.(weighted average original loan size )
May 3, 2004... Freddie Mac last week announced the implementation of enhancements for all PC pools starting July 2004. These changes are part of Freddie's ongoing review of its PC disclosure practices. They are also intended to promote increased transparency...

With eye on remittances, MIF looks to enhance DPRs.(Multilateral Investment Fund)(Diversified Payment Rights)
May 3, 2004... Multilateral action is heating up in Latin America. Just a couple of weeks following news that the Inter-American Develop -ment Bank (IDB) would likely provide a liquidity facility in a Mexican RMBS (see ASR 4/19, p. 1), a unit of the same bank...

Mexican farming state Oaxaca looks beyond crop yield.(Brief Article)
May 3, 2004... The Mexican state of Oaxaca will come to market this year with a securitization of federal co-participation revenue, the standard asset for sub-sovereign issuers. The issuer has registered a Ps250 million (US$22 million) program with regulators...

Fitch augurs similar tone in LatAm cross-border from last year: But interest rates and currency swaps offer caveats.
May 3, 2004... At the 2004 Latin America Conference held by Fitch Ratings, Senior Director Gregory Kabance predicted that the number of cross-border securitized deals would be nearly the same or slightly lower than the 19 registered by the agency last year....

FIDC pioneer BMG preps return to market.(Receivable investment fund)(Brief Article)
May 3, 2004... The Brazilian issuer touted as the first to publicly launch a receivable investment fund (FIDC) in March 2003 is coming back. Similar to the first deal, this transaction will be backed by consumer loans originated by government entities. Fitch...

May to be another solid month of European ABS.(Asset backed securities)
May 3, 2004... Deals continue to populate the European pipeline, promising a busy month ahead of the 2004 global ABS conference in Barcelona. A number of CDO structures joined the market last week, complementing an already large quiver of MBS deals on...

More lenient bankruptcy law could grow the subprime universe.
May 3, 2004... The new U.K. Enterprise Bill introduced in the U.K. relaxes personal bankruptcy rules, which is troubling to some, as personal bankruptcy is already on the rise. Opinions differ as to how this will impact U.K. ABS, though most sources believe...

Construction finance and RMBS deals emerge in Asia.(Residential Mortgage-Backed Securities)(Brief Article)
May 3, 2004... Japan-based Hankyu Corp., whose principal business is operating rail networks in the west of the country, will use securitization for the next project in its diversification scheme. The company will transform the Nishinomiya Stadium -...

Whispers.(financial news briefs)
May 10, 2004... HSBC recently poached four ABS pros from ABN AMRO to fill vacancies in its U.S. structuring and trading groups. ABS structurers Dan Costin, Cyrus Mohebbi and syndicate head Caroline Morrill were all hired from ABN AMRO last week. Mohebbi and...

Moves by AES, Ford and ING signal more domestic action in Argentina: Even crisis-afflicted power sector has ABS on tap.(asset backed security)
May 10, 2004... Seduced by the strong growth and rich opportunities of domestic ABS in Mexico and Brazil, many players have waved off Argentina. But judging by the flush pipeline, they may want to reconsider. And it's not only about quantity as the country...

CDOs for all seasons: The high-grade SF CDO is a hybrid conduit.(collateralized debt obligations)
May 10, 2004... While so-called high-grade structured finance CDOs sprung up to counter the wide liability spreads in SF CDOs last year, the forward pipeline continues to be strong, even as the dynamics are more favorable again for the traditional...

Future looks brighter for Metris.
May 10, 2004... Spreads for The Metris Companies series 2004-1 credit card ABS tightened on last week's news that it had finalized terms on a $300 million three-year unsecured Libor floater via Goldman Sachs. This completes a funding plan that injects $500...

The push for project finance CDOs.
May 10, 2004... Though talked up for several years, project finance CDOs have yet to make the dent once anticipated, considering the size of the potential collateral market and the drive of structurers into new products. The overseas market saw a project...

Attestation the primary focus in week one of the SEC's proposal.
May 10, 2004... First responses and comments began trickling out last week on the Securities and Exchange Commission's proposals for standardized securitization disclosure practices. All said, by deadline, it appeared that not many had weeded through the...

Auto sector takes spotlight in U.S. ABS primary.
May 10, 2004... The new-issue malaise in the U.S. ABS primary market continued last week, with just $8.5 billion marketing, $7.1 billion of which had priced as of press time. For the first time this year, however, the auto sector led the way, with $3.9 billion...

Moody's expresses concerns over mortgage ABS.
May 10, 2004... Recent trends in the mortgage sector of the ABS market have had positive impacts to date, but presenters at last week's Moody's Investors Service RBMS Investor Briefing raised red flags over recent vintage transactions. In particular, the...

CompuCredit to acquire subprime lender.(Brief Article)
May 10, 2004... In addition to increasing its own direct originations of subprime credit cards, CompuCredit Corp. announced last week that it will acquire a lender specializing in the subprime sphere for $106 million, a deal that should close late this...

A look at servicing certifications under the SEC's proposed rules for securitization reporting.
May 10, 2004... As an integral part of the Securities and Exchange Commission's proposed new reporting requirements for asset-backed and mortgage-backed securities, the commission is proposing to require a report of the "responsible party" on an assessment of...

Cashouts maintain prepay speeds in near term.
May 10, 2004... As home price appreciation prompts borrowers to tap the equity in their homes, researchers are looking at the impact on prepayments, now that rates may no longer be the primary incentive. MBS analysts from both Countrywide Securities and UBS...

Buying stalls as investors wait on FOMC and employment.(Federal Open Market Committee)
May 10, 2004... Last week's flows were choppy due to the Federal Reserve meeting and the prior Friday's employment report. Most investors were sidelined, though servicers were actively selling and there was some profit taking by banks. In addition, there was...

Pool principal now legitimate target for CMBS advance recoveries.(mortgage backed securities)
May 10, 2004... The use of pool principal collections to recover advances is becoming more commonplace in CMBS transactions in an effort to reduce interest shortfalls. "The concept is being more widely adopted throughout the industry," said Standard &...

Purchase versus refi: Who is the slow poke?(prepayment behavior discussion)
May 10, 2004... There has been a disagreement among Wall Street dealers on the prepayment behavior of refinance loans and purchase mortgages. While some researchers have argued that recently refinanced loans will prepay faster than new purchase loans, others...

Institutional buyers lap up HK tunnels deal.
May 10, 2004... The sale of the institutional tranches in the Hong Kong government's HK$6 billion ($769 million) securitization of tunnel revenues was completed last week. And, as expected, the deal - led jointly by HSBC Securities and Citibank Global Markets...

Brazil pulp producer Aracruz sticks to ABS in troubled times.(Aracruz Celulose)
May 10, 2004... Drawing on an existing receivables program, Brazilian pulp potentate Aracruz Celulose priced a US$175 million deal on April 30 at 6.361%. Going ABS in the lead-up to a Fed tightening made the most sense, said Chief Financial Officer Isac...

Banco Hipotecario de Uruguay heard averse to MBS, despite hints of deal.(mortgage backed securities)(Brief Article)
May 10, 2004... Uruguay's Banco Hipotecario (BHU) appears at first glance to have the major ingredients of an MBS in the domestic market. A new trust law has been in place since December; Moody's Investors Service assigned first-time ratings to the bank on...

Credito y Casa to return, this time with SHF guaranty.(Sociedad Hipotecaria Federal )(Brief Article)
May 10, 2004... Mexican housing finance company Credito y Casa is returning to the peso market with a Ps700 million (US$61 million) deal backed by bridge loans for construction. IXE and Santander Serfin are jointly leading the transaction, which will have a...

Third SCIP series slated, or that's the plan.(Societa di Catilarizzazione Immobili Publlici)
May 10, 2004... The SCIP will-they/won't-they over Italy's next SCIP deal was laid to rest last week as the Italian government confirmed its intentions to launch the third series this year. The SCIP deals, short for Societa di Catilarizzazione Immobili...

Covered Bonds coming in all shapes and sizes.
May 10, 2004... The U.K.'s third structured covered bond issue came out last week, while the roster continues to grow. The new product will continue to work side by side with the country's RMBS deals, sources said. Northern Rock and Bradford & Bingley...

All quiet on European front, but not for long.
May 10, 2004... The May Day holiday-shortened week saw little activity on both the primary and secondary markets, but sources said the rest of May looks set to bring significant volume, as a number of transactions were on the sidelines, preparing to circulate...

Whispers.
May 17, 2004... The ramp-up continues at HSBC Securities, which hired George Smith from Bear Stearns and Rob Diorio from CDC IXIS North America as managing directors in its U.S. ABS group. At Bear Stearns, Smith led the ABS syndicate and trading desks. Prior...

S&P requires increased enhancement for predatory mortgage loans.
May 17, 2004... Due to the proliferation of predatory lending legislation, Standard & Poor's announced at press time last week that it would require increased credit enhancement going forward for mortgage securitizations backed by loans in 15 municipalities....

Goldman/Straits with true AsiaCDO.
May 17, 2004... Goldman Sachs and Straits Lion, the Singapore-based asset manager, last week closed a novel Asia CDO called Straits Lion Asia, referencing primarily Asia-based credits. Goldman Sachs acted as sole bookrunner and structuring agent on the...

New rules furrow brows at ASF.(American Securitization Forum)
May 17, 2004... More color and commentary emerged in the second full week since the Securities and Exchange Commission released its 400-page proposal for new disclosure requirements to govern the ABS offering and reporting process. While panelists at last...

ACA CDOs hold up amid dark clouds.(ACA Financial Guaranty)
May 17, 2004... Despite the management changes and subsequent ratings uncertainty surrounding financial guarantor ACA Financial Guaranty, levels on the CDO asset manager's outstanding CDOs held firm throughout last week by some accounts, and gapped out by...

U.S. ABS supply remains slow, autos maintain pace.
May 17, 2004... The new issue ABS market had another sub par week, eking out just $8.9 billion in new supply, of which $6.3 billion had priced at press time. For the second week in a row, the auto sector came out on top with $3.1 billion, more than double the...

GE preps inaugural CDO.(Collateralized debt obligations)(Brief Article)
May 17, 2004... Continuing its expansion into securitized markets, GE Asset Management is planning its first CDO for later this year, likely sometime in the third quarter, sources said. The transaction, of a yet-to-be determined size, will be backed by a mix...

Tier 1 cap, the Fed, and TruPS - will issuance survive?(trust preferred securities)
May 17, 2004... While the market is digesting the new ABS proposals from the Securities and Exchange Commission, a separate batch of proposals from the Federal Reserve Board were being doled out to bank holding companies. One proposal would allow just 25% of...

ACE Guaranty just shy of two triple-As.(Moody's rating)
May 17, 2004... ACE Guaranty's Assured Guaranty received some bad news last week, when Moody's Investors Service upgraded its Insurance Financial Strength rating to Aa1' - one notch below the triple-A rating it coveted - from Aa2'. In its announcement, Moody's...

MBS recap: wider spreads draw back buyers.(mortgage backed securities)
May 17, 2004... Last week's activity was all about buying. Substantial widening followed the Federal Open Market Committee's meeting, and spreads moved further on the April employment report, but investors just had to step in, as the sector was too attractive...

Bank demand will remain strong, analysts say.(market for mortgage backed securities)
May 17, 2004... With a curve flattening on the horizon, the MBS market is gearing up for a potential shift in bank demand. A large liquidation of bank portfolios would cause a significant cheapening of mortgages. On the other hand, if bank demand remains...

Turnover speeds determine relative value going forward.(mortgage turnovers)
May 17, 2004... With the mortgage index dipping into discount price territory, relative value is currently based on turnover expectations and not call risk, analysts said. "Whether mortgages are rich or cheap is now simply a question of turnover...

TSI update: First deal slated for summer.(True Sale International GmbH)
May 17, 2004... Germany's True Sale Initiative (TSI) is finally moving ahead, as the thirteen banks to be impacted by the legislation gathered to sign the founding documents for the True Sale International GmbH. A spokesperson for the sponsoring bank, KfW,...

Basel takes another step forward.(Basel II banking laws)
May 17, 2004... The Basel Committee last week said that it had achieved consensus on the latest round of proposals, which puts the implementation of standard and foundation on track with the year-end 2006 deadline. The more advanced approaches, however, have...

Breaching coverage ratios, HOTELoC suffers further rating actions.(interest cover ratio)
May 17, 2004... The HOTELoC structure found itself in the headlines again last week after the trust breached its interest cover ratio (ICR). The transaction has been performing below expectations since early 2004. Both Standard & Poor's and Moody's...

Primary market dominated by RMBS deals.
May 17, 2004... Guidance came out last week for Northern Rock's Granite master trust deal, which is prepping to price by month-end. Little else was new on the primary front, despite talk over the past few weeks of a building pipeline. According to market...

Cross-border covered bond talk kindled in Central America.
May 17, 2004... Region already has its own homegrown variety Well-established in Europe, covered bonds are being talked about in Central America as a potential vehicle for cross-border funding. The lower costs associated with this structure as compared...

Salvadoreno roadshows tweaked structure.(Banco Salvadoreno)
May 17, 2004... Wachovia Securities was heard roadshowing its second Latin American ABS last week, a US$75 million transaction for Banco Salvadoreno. The deal is backed by diversified payment rights (DPR) and tenor is expected to come at between five and seven...

Brazil's debt-submerged CESP looks to FIDC for R$315m.(Companhia Energetic de Sao Paulo)
May 17, 2004... Struggling hydro-power producer Companhia Energetic de Sao Paulo (CESP) is pressing ahead with plans to issue a receivables investment fund (FIDC) in Brazil's domestic market, sources said. In a release, the company said it was seeking up to...

Falabella taps Argentina's ABS market.(Brief Article)
May 17, 2004... Argentina's consumer sector continues to churn out issues. CMR Falabella closed a Ps13.4 million (US$4.6 million) deal backed by consumer credit on May 7, the first time the issuer tapped Argentina's ABS market. Underscoring the flush liquidity...

Whispers.
May 24, 2004... Banc One Capital Markets ABS syndicate head Andy Cherna will be retained by JPMorgan Securities in the post-merger entity, the company announced internally last week. In his new position, Cherna will report to JPMorgan's head of syndicate and...

Oncor RRB better late than never But no longer named Oncor...
May 24, 2004... The issuer formerly known as Oncor Electric made its long-awaited return to the ABS market late last week, announcing a $790 stranded cost ABS expected to price this week. After the transaction was renamed to TXU Electric Delivery Transition...

LatAm deal makers plow on.(asset backed securities)
May 24, 2004... ORLANDO, Fla. Clobbered by rising interest rates, jacked-up oil prices and the threat of a slowdown from China, Latin American debt markets overall have seen better times. But in the field of structured finance, recent developments have been...

Pru carves niche as manager replacer'.
May 24, 2004... Equity holders in a fund often seek out replacement managers for ailing collateralized debt obligations (CDOs) based on the strength of the replacement portfolio manager's track record. But rarely, if ever, has a firm established a distinct...

How complex are your structures? More importantly, are they shady?(Federal Financial Institutions Examinations Council)
May 24, 2004... Last week the bank regulators and the Securities and Exchange Commission jointly released 28 pages of provisional, heavily principles-based guidelines for identifying and establishing control policies aimed at "complex structured finance...

GMAC CM preps revolving CDO.
May 24, 2004... GMAC Commercial Holding Capital Markets Corp. is planning a unique revolving structure CDO, expected to hit the market sometime this week, sources said. The $370 million transaction, named Capital Trust, will be backed by previously issued B...

ABCP in the pre-summer doldrums - for most of the year, it seems.(Brief Article)
May 24, 2004... Activity has picked up in the asset-backed commercial paper market in recent weeks - with a few large deals closing - though outstandings, as measured by Federal Reserve, still show flat to declining ABCP. A fair amount of the activity in...

U.S. ABS volume jumps to $15 billion.
May 24, 2004... The primary ABS market looked relatively lively last week, issuing $15.8 billion in new supply - close to double the combined volume of the preceding two weeks. The steady clip was spurred on by $8.5 billion in global RMBS supply. Dan...

Wachovia offers AIRPT repack ABS.
May 24, 2004... With the $114.5 million WRAPS series 2004-1 transaction in the market last week, Wachovia Securities became the second bank to take distressed outstanding aircraft ABS, buttress it with safer cashflows and repackage it into a new, higher-rated...

Bear bullish on secondary CDOs.
May 24, 2004... Not surprisingly, the rapid development of a secondary market for CDOs is still a hot issue, as expressed by the several hundred in attendance at a presentation at last week's Global Credit Conference, hosted by Bear Stearns in New York. ...

Debtholders disputing Sears buyout call.
May 24, 2004... When Citigroup Inc. bought Sears, Roebuck and Co.'s $29 billion credit card portfolio last year, the companies cast the deal very much as a partnership rather than a takeover. Now it looks like the partnership has picked up some baggage: a...

GNMA discounts fast and furious, but for how long.
May 24, 2004... MBS analysts are trying to figure out whether GNMA discounts will continue to pay down faster than their conventional counterparts. JPMorgan Securities expects that speeds will be even between 2003 GNMA and FNMA 5s this year, but with a...

Pay attention to cap risk now, or else.
May 24, 2004... With rising rates, investors should pay close attention to cap risk, as embedded caps will significantly impact relative value in the hybrid ARM market going forward, said analysts last week. In a recent report by Credit Suisse First...

MBS spreads grind tighter in quiet flows.
May 24, 2004... Last week, mortgage activity was rather lethargic. Given the previous week's run-up, investors and analysts turned more neutral, though with a positive tilt due to the attractive carry. Flows were generally two-way and consisted of moving down...

Voices raised inside the Beltway in support of TRIA.(Terrorism Risk Insurance Act)
May 24, 2004... There is bipartisan support on Capitol Hill for U.S. Secretary of the Treasury John Snow to extend the "make available" provision of the Terrorism Risk Insurance Act (TRIA). The Department of the Treasury is accepting comments on the provision...

Mexico real estate remains LatAm's golden child.
May 24, 2004... Much of the talk at the 3rd Annual Securitization in Latin America Summit centered on Mexico, the industry's golden child in terms of recent growth and opportunities. And within that country, the most promise was pinned on real estate. "The...

Brazilian ABS players see rich vein in past-due taxes.
May 24, 2004... On the sidelines of the 3rd Annual Latin American Securitization Summit, there was talk among the Brazilians about mining a new asset class: renegotiated, past-due taxes owed to municipalities and states. "This could be a huge market," said one...

IFC-enhanced NPL surfaces in Colombia.(Brief Article)
May 24, 2004... Titularizadora Colombiana is readying what is being touted as Latin America's first non-performing loan (NPL) deal. Holding a 5% guaranty from the International Finance Corp., the US$94 million-equivalent deal is heavily over-enhanced,...

IFC et al talk of business up ahead at LatAm summit.(Latin American Securitization Summit, International Finance Corp.)(Brief Article)
May 24, 2004... Between the networking and socializing, the 3rd Annual Latin American Securitization Summit offered some hints of action to come. Focusing on the domestic markets, the International Finance Corp. (IFC) aims to add three people to the six...