CDOs/CLOs

Sallie Mae rolled out a new loan program earlier this month, and although one official there said the lender had no existing plans to fund it through securitization, market players think otherwise.

Just like short-term spreads on several deals, the ABS primary market spigot tightened up a bit more last week, with just $4.2 billion in deals coming out by press time.

Before the viatical settlement bond market was virtually shut down by then-unforeseen developments in drug therapies for AIDS patients, the National Association of Insurance Commissioners, or the NAIC, protected its own interests by enacting professional guidelines for setting up the policies.

A hedging strategy gone wrong at NovaStar Financial Corp. could have compromised its real estate investment trust status, according to company executives. This event might have had a more negative implication on the subprime lender than the income draining moves it has deployed to prevent it. If a company fails to meet the relatively rigid accounting standards required for REIT status, it would lose its loan portfolio's tax-exempt status.

Dick D'Addario, senior portfolio manager at the New York-based investment firm Avenue Capital Group, and his colleagues have just closed a new $500 million collateralized loan obligation (CLO), their company's third such vehicle thus far.

NEW YORK - The capital markets swung its doors wide open to the aviation industry last year, allowing close to $5 billion in issuance. Still, the securitization market could go a lot further if it could allow more flexibility within the deal structures, said panelists at the Third Annual UBS Transportation Structured Debt Conference held here last week.

Privately held ACC Capital Holdings, the parent company of Ameriquest Mortgage Co., last week announced the closure of 229 retail branches, resulting in job loss for roughly 3,800 of its employees - representing about 70% of its retail staff. The move constitutes the third round of layoffs at the company since November.

Bear Stearns this month will bring to market a $300 million commercial real estate CDO. The deal, Vertical CRE CDO 2006-1, will be the first CRE CDO managed by Banc of America subsidiary Vertical Capital, which has six deals in the market totaling $4 billion. The most recent offering was the Vertical ABS CDO 2006-1, which closed last month, according to Standard and Poor's.

Volatile prepayment speeds on student loans have made it difficult for investors to assess how ABS bonds will respond to prepayments. This is why Lehman Brothers created an interactive tool called SPREE that takes an investor's loan-level prepayment assumptions and translates them into deal-level prepayment speeds, which are also based on Bloomberg estimates.

The U.S. primary ABS market ground through another week of moderate issuance, as volume came to a moderate $4 billion by press time. Another $300 million or so was expected to price by Friday, bringing production in line with estimates.