CDOs/CLOs

One of the CDO market's best innovators, AXA Investment Management, is said to have a first-of-its-kind, actively managed single-tranche issuance vehicle in the works via JPMorgan Securities.

Fitch Ratings was the beneficiary of a recent dispute between student lender Alaska Student Loan Corp. and Moody's Investors Service, in which the issuer claims it was dissatisfied with the customer service it received from the ABS market's leading rating agency. For its part, Moody's claims that it was asked to remove its rating from the 2002 and 2003 series of tax-free student loan ABS after expressing concern over potentially eroding credit protection as the trust issues additional transactions.

After a recent hiring binge, HSBC is outfitted to make its mark in term ABS.

The issuer formerly known as Oncor Electric made its long-awaited return to the ABS market late last week, announcing a $790 stranded cost ABS expected to price this week. After the transaction was renamed to TXU Electric Delivery Transition Bond 2004-1 from the initial Oncor Electric Delivery Transition Bond 2004-1, investors saw one of the more structurally distinctive offerings in some time.

Equity holders in a fund often seek out replacement managers for ailing collateralized debt obligations (CDOs) based on the strength of the replacement portfolio manager's track record. But rarely, if ever, has a firm established a distinct replacement manager business whereby the firm proactively targets poorly performing CDOs that need replacement managers. That's exactly what Prudential Investment Management (PIM) is doing.

GMAC Commercial Holding Capital Markets Corp. is planning a unique revolving structure CDO, expected to hit the market sometime this week, sources said. The $370 million transaction, named Capital Trust, will be backed by previously issued B piece and mezzanine tranches of CMBS retained or purchased by GMAC Commercial Mortgage, which it will be able to rotate in and out of the trust.

Activity has picked up in the asset-backed commercial paper market in recent weeks - with a few large deals closing - though outstandings, as measured by Federal Reserve, still show flat to declining ABCP.

The primary ABS market looked relatively lively last week, issuing $15.8 billion in new supply - close to double the combined volume of the preceding two weeks. The steady clip was spurred on by $8.5 billion in global RMBS supply.

With the $114.5 million WRAPS series 2004-1 transaction in the market last week, Wachovia Securities became the second bank to take distressed outstanding aircraft ABS, buttress it with safer cashflows and repackage it into a new, higher-rated security. The deal, expected to price mid to late this week, is a re-securitization of the A-9 tranche of Airplanes Passthrough Trust 2001-1, which has also been repackaged by rival and original transaction underwriter Morgan Stanley.

Not surprisingly, the rapid development of a secondary market for CDOs is still a hot issue, as expressed by the several hundred in attendance at a presentation at last week's Global Credit Conference, hosted by Bear Stearns in New York.