CDOs/CLOs

CDO heavyweight Merrill Lynch once again dominated U.S. CDO underwriting in 2006. The firm brought not only the greatest dollar volume in deals to the market, but also led innovation throughout the sector's record-setting year. Through a combination of landing key clients, new hires and high demand, the investment bank underwrote 65 deals last year totaling more than $50 billion and a 15% market share, according to Thomson Financial league table data.

Claire Robinson won a promotion to senior managing director at Moody's Investors Service, where she will oversee the rating agency's asset finance group for the Americas, as well as its U.S. public finance group.

Rarely do the domestic and global ABS markets leave participants with little to discuss or remember from the previous year. Who would have imagined, still, that the student loan sector would produce one of the U.S. ABS market's most anticipated and talked-about structures for 2006? That is what happened with Nelnet SAFE extendible-note ABCP program. Elsewhere in the U.S., the CDO market, not resting from its vehement drive to greater profits and diversification, generated too many structures to chose just one, so ASR selected three: SURF, Everest I, and a nifty hybrid CDO from Merrill Lynch that required no triggers.

Call it safe, call it predictable, but don't dare call the Federal Family Education Loan Program (FFELP) ABS collateral type stodgy. While the student loan ABS sector pulled out all the stops for a year of issuance totaling $34 billion, the FFELP program gave the asset-backed commercial paper sector far and away the most notable deal in 2006 - that is, if the spectacle of ravenous investors beating down the issuer's door for the paper is any indication.

Energized by high demand and synthetic technology - from LCDS to CDO CDS to the ever-popular ABCDS - there was no shortage of notable deals within the U.S. CDO sector in 2006.

The one notable deal from China in 2006 was issued in the international market. Macquarie Wanda Real Estate Fund - a joint venture between Australia's Macquarie Group and Chinese property developer Dalian Wanda - in October sold the first offshore CMBS involving nine properties located in the People's Republic of China.

Russia's first mortgage backed security is remarkable for a number of reasons, but the most compelling is this: private housing in the country scarcely existed before the 90s. By historical standards, the country's move from private property to widespread home ownership to the birth of the mortgage has been more a breathless race than a gradual evolution. And last year, state-owned JSC Vneshtorgank (VTB) took the baton.

As the European securitization market matures so does its repertoire of deals. Gone are the days of extreme innovation. Instead, the market is increasingly defined by steadiness and dependability. This is demonstrated by the steadfast pricing spreads over the past year. But a lack of innovation did not mean a lackluster year - 2006 still had its share of shining stars that stood out in the record mix of deals, specifically in the CMBS market.

By November of last year, it appeared that Mexico would be a nonentity in the cross-border market for all of 2006. Domestic investors' unquenchable thirst for securitization was deterring originators from going abroad and the promise of the first cross-border RMBS was fading as originator Metrofinanciera delayed a deal over M&A matters.

Newcastle Investment Corp., a real estate investment and finance company, is planning its debut in the ABCP arena with an extendible note asset-backed commercial paper program that will execute repurchase agreements (repos) for its high quality portfolio of agency mortgages, ARMs and hybrid mortgage securities. Furthermore, it introduces a credit enhancement technique that differs distinctly from existing SLN programs.