CDOs/CLOs

The Public Service Commission of West Virginia recently approved a plan that would allow Allegheny Power to use ABS to finance an emissions control facility at a West Virginia plant.

The Bank of New York expects to take its share of the corporate trust market to number one by acquiring JPMorgan Chase's corporate trust business, in a combination projected to total $8 trillion of debt issues. And, according to Karen Peetz, executive vice president and head of corporate trust at BNY, the purchase will sharply boost BNY's client base, particularly within the CDO sector, where the bank will press towards a near-term goal of 60% market share.

As increasing demand ground CLO spreads tighter and tighter in 2005 - so much so that a number of deals were at risk of breaching spread requirements - more managers looked to middle market loan collateral as a higher yielding alternative.

Spring break and observances of major religious holidays suppressed the primary ABS market for the second consecutive week, resulting in a mere $5.7 billion in issuance by Wednesday afternoon. That fell short of trader estimates, which put issuance between $8 billion and $10 billion.

The top 10 most widely referenced entities within the burgeoning U.S. credit default swap market accounted for 43% of all trades last year, excluding the indices. This is compared with only 27% in 2004, according to Fitch Ratings.

Recent legislative changes to government student loan programs might open doors for more borrowers, but they could also increase the likelihood of borrower defaults, said Fitch Ratings last week.

In a very busy week, bond insurer XL Capital created a holding company to oversee its financial guaranty insurance and reinsurance businesses, and launched an initial public offering to fund its growth.

Look for the U.S. structured finance team at Deutsche Asset Man-agement - a large investor in the ABS market - to grow its portfolio even more over the coming year.

Year to date as of 04/12 Term (days) 04/06 04/07 04/10 04/11 04/12 1-week

Full Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market Managers Proceeds (mils) Rank Mkt. Share # of Issues Citigroup 5,077.2 1 26.7 11 JP Morgan 3,956.1 2 20.8 10 Deutsche Bank AG 2,020.4 3 10.6 7 Barclays Capital 1,725.5 4 9.1 4 Royal Bank of Scotland Group 1,606.8 5 8.5 3 Merrill Lynch & Co Inc 1,250.0 6 6.6 3 Credit Suisse 950.0 7 5.0 2 Wachovia Corp 939.0 8 4.9 3 Bear Stearns & Co Inc 824.9 9 4.3 1 Goldman Sachs & Co 411.2 10 2.2 1 Industry Total 19,024.6 - 100.0 25 Source: Thomson Financial