CDOs/CLOs

General Motors Acceptance Corp. may be issuing a lot less ABS than expected this year, and possibly for the next five, as Bank of America Corp. last week agreed to buy $55 billion worth of retail auto loans from GMAC over the next five years. Not only will the deal reduce the amount of loans GMAC has available to securitize, but sources also believe BofA is not likely to securitize any of those loans via its new Bank of America Securities Auto Trust.

As part of its recently finalized reforms to the securities offering process, the Securities & Exchange Commission has interpreted a rule under the Securities Act of 1933 that will leave ABS underwriters liable for all deal information provided to investors up until an investment decision is made.

Rarely would a panel of four lawyers talking about securitization be considered lively, but last week's Sunset Seminar on offering reform hosted by the American Securitization Forum, managed to be just that. The panel, moderated by Thacher Proffitt & Wood partner Stephen Kudenholdt, featured Richard Careaga, senior counsel for Washington Mutual, Chad Eisenberger, director and counsel for UBS and Jordan Schwartz, partner Cadwalader, Wickersham & Taft.

The U.S. ABS primary market refused to give in to the summer slowdown as it generated around $13 billion for the third week in a row.

After roughly four years on the drawing board, Willis Lease Finance Corp. completed the first-ever term securitization backed by aircraft engine leases last week, pricing a $228 million senior/subordinated transaction via lead manager UBS. In addition to being the first aircraft lease ABS, Willis Engine Securitization Trust 2005-1 was the first operating lease asset transaction to price without a monoline surety wrap.

UCC Capital Corp. plans to price the first-ever revolving term securitization backed by licensing fee revenues from a variety of intellectual property assets. UCC Capital will act as issuer, underwriter and servicer for the proposed offering, which is expected to price within the next 30 to 45 days.

Subprime mortgage lender Saxon Capital Inc. this month simultaneously lost two of its executives. Bradley Adams, executive vice president in charge of capital markets and Mark Rogers, senior vice president and corporate strategies director, both left the company on July 15 and July 14, respectively.

Morgan Stanley introduced its new student loan ABS prepayment model last week, determining that some shorter student loan paper looks cheap versus longer dated supply. By using a different calculation of projected prepayment activity, the model provides a way of looking for value opportunities in the sector.

Due to an early delivery of logs to its parent company, Scotia Pacific Co. was able to avoid a $2.2 million shortfall and make its July 20 interest payment to noteholders - but the company's future ability to keep the notes current remains uncertain. The notes are the only publicly rated timber collateralized notes outstanding, and only one of two such deals to ever hit the market, according to Everett Rutan, an analyst at Moody's Investors Service.

The SEC's Miami office is recommending enforcement action against Bear Stearns for its involvement in the pricing, analysis and valuation of some $62.9 million of CDOs it sold to Puerto Rican bank Westernbank Puerto Rico, which is owned by W Holding Co., Bloomberg reported late last week. Bear disclosed in a July 11 Securities & Exchange Commission filing that both the SEC and New York Attorney General Eliot Spitzer are investigating Bear Stearns' CDO trading practices with clients (see ASR 7/18/05).