CDOs/CLOs

Taking on corporate exposure through the credit derivatives market has become one strategy a growing number of CDO investors are embracing. Yet while the credit derivatives market continues expanding, how liquidity performs for single names is a phenomenon CDO investors may not fully understand when exploring new CDO deals that harness credit derivative swaps.

The city of New York is selling $496.2 million in triple-A rated taxable muni bonds via the Fiscal Year 2005 Securitization Corp. vehicle, a one-off transaction for the city being led by Merrill Lynch.

The best opportunity in the ABS market can be found in the triple-A home equity sector as spreads have widened to the mid-30 basis point to Libor range. The trend to wider home equity spreads bucks the general tightening trend of other asset classes such as credit card and three-year U.K. MBSs. "With the recent positive economic news, especially the employment pick-up, most consumer credit card spreads have continued to ratchet in," writes Thomas Zimmerman, head of ABS research for UBS. "But home [equities] are the exception."

Due to a flurry of post-deadline submissions, ASR has extended the deadline for Deal of the Year nominations through Nov. 30, 2004. Qualifications for entry remain the same, with the exception of the transaction closing date, which has also been moved to Nov. 30. To be eligible, a deal must have closed between Nov. 1, 2003 and Nov. 30, 2004.

Pacific Gas & Electric Co., the electric utility company that was forced into a Chapter 11 bankruptcy in 2001, in the wake of the California energy crisis, is looking to bring its first stranded cost securitization in seven years to the market before year-end. PG&E hopes to price the offering sooner rather than later, according to records, and currently plans to forge ahead despite having yet to receive Internal Revenue Service clearance to price the deal.

Equipment leasing investment company ATEL Capital Group is ready to launch the latest iteration of its equity fund, ATEL Capital Equipment Fund XI, according to a recent S-1 filing with the Securities and Exchange Commission.

With its biggest push in the U.S. ABS market this year, monoline surety provider XLCA wrapped its first-ever HELOC offering last week, a $1 billion series 2004-Q offering from Countrywide Home Loans Inc. XLCA plans to be aggressive in the HELOC sector going forward as part of the guarantor's broader

The U.S. primary ABS market was relatively slow last week as the bond market took the day off on Thursday in observance of Veteran's Day. As of the market's close on Wednesday, total new issue volume was at roughly $5.2 billion but several deals were expected to price on Friday.

The deal flow in structured settlements is expected to maintain a steady pace, and the market could see another public term transaction before year end, sources said.

It's as if the holidays have come early for CDOs, with market constituents reporting outstanding levels of issuance both domestically and globally - and the year still has over a month to go.