CDOs/CLOs

Pending implementation of Basel II in Europe and an unwavering confidence in the mortgage market marked substantial changes to two ABCP conduits in recent weeks.

Ownit Mortgage Corp. suddenly shut its doors last week, surprising both the industry and its own employees - who apparently were told only the night before. The self- proclaimed top-15 subprime mortgage lender was overwhelmed with delinquencies and buyback requests, sources said, even though the company's founder and chief executive Bill Dallas less than a year ago predicted the same fate for other subprime mortgage lenders.

Factory orders for durable goods might have dropped significantly, according to the U.S. Commerce Department figures released last week. However, the dip is apparently not enough to undermine performance on leases for transportation and equipment, which secure GE Capital's latest midticket equipment term ABS deal. Indeed, performance on the issuer's underlying collateral have been so strong that the reduced initial credit enhancement levels and incorporated a smaller reserve account and a step-down mechanism in its latest deal structure.

Last week looked in danger of being an all-HEL, all the time sort of issuance period, but a mid-ticket equipment lease, a shipping container deal and a stubbornly inverted swaps spread curve intervened to break up the monotony.

LAGUNA NIGUEL, Calif. - Amid a rash of CDO structural innovations designed to lure equity investors, a familiar debate is again rearing its head - whether CDO managers should invest in the equity of the deals they manage. While some investors say a manager that puts its "own skin in the game," demonstrates confidence and commitment toward its product, others say a manager's equity investment could present a conflict of interest.

LAGUNA NIGUEL, Calif. - While production companies are increasingly tapping Wall Street for funds to help counter the cost of making movies, one consultancy is looking to extend commercial paper and term financing for the first time to independent films. Sylvain Raynes, a founding partner of R&R Consulting, said he's been working for several years on a way to extend financing to the less institutional side of movie production.

LAGUNA NIGUEL, Calif. - New CLO managers continue to be a thorn in the side of more seasoned players, who equate managing a deal in the currently benign credit environment to riding a bike with training wheels that investors can't see.

US Express Leasing, an independent equipment leasing company, recently priced its first term securitization, a $325 million deal. Market watchers say it is another sign of resurgence from a market that experienced a slowdown just five years ago.

The recently formed Securities Industry and Financial Markets Association (SIFMA) announced that its first management team has taken root. The industry organization stems from the merger between the Bond Market Association and the Securities Industry Association executed earlier this year.

The merger of The Bank of New York and Mellon Bank that was announced last week is expected to create the world's largest asset custodian and corporate trustee.