CDOs/CLOs

auto ABS 9% credit card ABS 10% enterprise finance 0% equipment ABS 1% real estate ABS 70% structured settlements 0% student loan ABS 9% trade receivables 1%

The subprime RMBS from the 2005 vintage are turning into a puzzle for market professionals, because although the adjustable-rate loans are experiencing significant default rates, the fixed-rate deals have performed well. Out of all this confusion, however, lenders and issuers say the big picture offers ample opportunity for them to sustain business growth.

Dominion Bond Rating Service is expanding its presence in the EMEA region as well as growing its CDO business with several new hires in those areas.

Primary issuance in the ABS market chugged along last week and cleared about $9 billion in new deals by press time Thursday, continuing a push to circle transactions before the end of May. Judging by the amount of deals in the market on Thursday, some professionals expected issuance to go as high as $20 billion by the close of business on Friday.

Dealers are becoming increasingly interested in extending repo financing - a form of leveraged investment common in a number of asset classes - to would-be CDO investors, according to JPMorgan Securities.

As the International Swaps and Derivatives Association prepares to release standards for trading leveraged loan credit default swaps - the market is expected to skyrocket just as the CDS of ABS market has thrived under increased standardization and liquidity. Syndicated loan volume alone has boomed over the past several years - reaching more than $3 trillion globally and constituting more than a third of all syndicated lending within the U.S., according to Fitch Ratings.

This year's T-Bill auction will boost student loan rates by 184 basis points, pushing the variable rate on FFELP loans to 4.84%, and Stafford loans originated to 6.54% during the in-school, deferment and grace periods, and to 7.14% during repayment status. Market watchers say the new rates will prompt a consolidation rush, and cause sharp prepayment speeds on outstanding FFELP deals in 2H06.

The merger of Aames Financial Corp. and Accredited Home Lenders - a move that is expected to create the sixth-largest subprime retail lender - is being called the first in an anticipated string of consolidations within the U.S. subprime mortgage lending industry, where participants continue to battle the higher cost of doing business. San Diego-based Accredited late last month announced plans to acquire Aames, a Los Angeles-based real estate investment trust for $340 million in cash and stock.

Mention of the latest developments in credit default swaps, whether on CDOs or ABS, usually calls to mind an ever-swelling notional market value and customized deal structures. But the call for a standardized trading framework has prompted several leading industry professionals to refine plans to create standardized frameworks for documenting and tracking credit default swaps trades to make sure they are in keeping with the spirit of their original contracts.

Full Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market Managers Proceeds (mils) Rank Mkt. Share # of Issues Citigroup 6,627.6 1 23.6 13 JP Morgan 3,828.6 2 13.6 10 Wachovia Corp 3,139.5 3 11.2 7 Deutsche Bank AG 2,602.6 4 9.3 8 Merrill Lynch & Co Inc 1,847.5 5 6.6 4 Barclays Capital 1,705.7 6 6.1 4 Banc of America Securities LLC 1,682.4 7 6.0 2 Credit Suisse 1,550.0 8 5.5 3 Royal Bank of Scotland Group 1,479.3 9 5.3 3 Goldman Sachs & Co 868.7 10 3.1 2 Industry Total 28,093.3 - 100.0 34 Source: Thomson Financial