CDOs/CLOs

After coming off of an extended weekend, the ABS market had another relatively sedate week of production. By press time, market participants expected about $12 billion in ABS debt to come to market, although slightly more than a third of that had priced by then.

While the top two U.S. cash CDO asset managers, in terms of outstanding liabilities, defended their territory for the three quarters ending June 30, an influx of new managers - particularly in the CLO space - are beginning to thin the market share enjoyed by those at the top, according to a recently released Standard and Poor's survey.

The private placement market - which is currently waiting for a pick up in issuance - was graced with a 144A securitization backed by timber receivables.

Hoping to profit from the CDO expansion wave, Wilmington Trust Corp. has formed a subsidiary to operate most of its CDO business. The firm recruited from independent capital markets and risk management consultancy and hired its founder and CEO and president to lead the CDO administration effort at Wilmington.

The asset securitization market has seen several key changes since the beginning of the year, but that is not at all reflected in the lineup of lead manager rankings. Citigroup Global Markets tightened its iron grip on the title as top lead manager of ABS deals by claiming first place in the ranking for the year to date, according to data from Thomson Financial.

Final regulatory guidance for federally chartered bank lenders on so-called non-traditional mortgage products came forth to a relatively receptive market late last month. The guidelines were little changed from those proposed last December.

With the ABS market coming out of one holiday weekend and going into another, plus historical seasonal slowdowns in activity, trading desks were fairly quiet last week. At last tally, market professionals estimated that new issuance would not amount to more than $15 billion.

Merrill Lynch dominated CDO underwriting in the third quarter when it managed more than $14.7 billion worth of deals and increased its market share to 18.2%. In the first three quarters of this year, the investment bank has brought a total of $34.6 billion worth of deals to the market - almost doubling the $18.3 billion it did in the first three quarters of last year, according to data maintained by Thomson Financial. Total CDO issuance as of the third quarter was nearly $227 billion, completely eclipsing the $103.6 billion in CDOs issued to the market by the third quarter in 2005.

After doubling its assets under management and the number of its employees, then consolidating its various businesses into three sectors, Florham Park, N.J.-based GSC Partners has changed its name to GSC Group.

President George W. Bush signed the Credit Rating Agency Reform Act into law last week, setting in motion substantial changes that could revamp the rating agency business by next year.