CDOs/CLOs

In the next chapter of the ongoing tobacco litigation saga, the Department of Justice will seek to reclaim $280 billion in ill-gotten profits from tobacco companies under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a statute originally intended to prosecute the Mafia. The outcome could hurt ABS transactions backed by litigation fees.

While traditional institutional investors still purchase the bulk of asset-backed securities, one segment of the investing community has maintained a healthy appetite for privately marketed ABS, according to a recent survey by ASR sister publication Private Placement Letter. Given the level of investment by this group over the last two years, evidence suggests the ABS market may have a growing audience to discreetly market deals towards.

Fitch Ratings recognizes that the quality, stability, and financial condition of seller/servicer operations have a direct effect on the performance of asset-backed securities (ABS) transactions across all product types. Therefore, Fitch has always used seller/servicer assessments to augment its ABS default, loss, and cash flow models when analyzing structures and assigning credit enhancement levels.

As the end-of-August slump begins engulfing Wall Street, many asset-backed players go on vacation - a seasonal flight that is even more pervasive this year.

Damage estimates have hit the $15 to $20 billion range in the wake of Hurricane Charley. Miles of manufactured houses were destroyed, thousands of residents were displaced and businesses caught in the path remained shuttered up at press time, sidetracked from normal operations by an extensive cleaning-up effort and repair work.

Market sources report that Nomura Securities is structuring its first term offering backed by life settlements, although it is unclear when the transaction might be completed.

Accredited Home Lenders, Inc. priced a $1 billion senior/subordinate deal last week via lead agent Lehman Brothers, marking the home equity lender's largest ABS to date and its first transaction offering yieldier subordinate bonds.

The U.S. ABS primary market snapped to attention last week with close to $11 billion priced as of Thursday's market close. Real estate ABS alone was good for roughly $5 billion of the total, as the auto sector also showed strength.

Irvine, Calif.-based ECC Capital Corp. has filed with the Securities and Exchange Commission for its initial public offering as a real estate investment trust (REIT).

The Financial Accounting Standards Board staff issued a proposed position Tuesday, dubbed Proposed FSP FAS 140-b, outlining its concerns over whether 12b-1 fees are a sellable asset or a future flow. The Board calls into question the current practice of treating sold fee collection rights as sold assets as opposed to deferred income. It is unlikely, however, to have much of a negative impact on mutual fund fee ABS due to the small chance that mutual fund managers would suspend broker fees because of the changed accounting status, sources said.