CDOs/CLOs

Rev Cred/Home Eq 41% Credit Card Rec 14% Auto Loans/Recs 12% Non-Jumbo Mtg Ln 12% Student Loans 6% Other 15%

While the European non-CDO market appears to slowing in August, the U.S. ABS primary market is seeing plenty of activity, pricing $11.7 billion in new-issue supply. For once this year, the high-quality auto and credit card names left little room for home equity issuers to tap investor demand, which by week's end was strong for the pair of mortgage-related offerings in the market.

Spreads for DVI medical equipment ABS once again widened last week after the company missed a $7.7 million coupon payment for its only outstanding unsecured bond obligation. Described as having "one foot in the grave and the other on a banana peel," market participants see only two ways for DVI to continue as an ongoing concern - through bankruptcy or by obtaining a covenant waiver - the latter being viewed as unlikely.

After securitizing both dealer floorplan and business loan collateral this year, GE Capital is prepping an entrance into the credit card sector of the ABS market. While still in the preliminary stages, GE Capital unit Monogram Credit Card Bank of Georgia filed a preliminary prospectus with the Securities and Exchange Commission to securitize its private label and retail credit card originations.

New-issue supply totaled just $4.4 billion as early-week Treasury declines stole the focus, delaying transactions in the market. A pair of de-linked credit card offerings came and went quickly, but the largest offering last week was brought by student lender Sallie Mae, continuing the deluge of student loan supply this year. Also, a pair of NIMs priced, from two of the large mortgage lenders in the market.

The ABS/CMBS secondary markets moved hot and heavy last week, according to traders, while mortgages suffered. Amid semi-decent economic news, one trader called the action a "reverse flight to quality" trend, as structured finance triple-As, similarly to Treasurys, may experience a slight sell-off.

It's better to be a subprime lender than a prime one these days, according to the chairman and chief executive of New Century Financial Corp.

After months of marketing, the $225 million pharmaceutical patent royalty securitization from Royalty Pharma Finance Trust, just the second ever such transaction, closed last week after having been placed into an undisclosed conduit. Structured and underwritten by Credit Suisse First Boston, structural changes and additional credit enhancement were added to the trade to mitigate the risks that led to the 2000 transaction, BioPharma Royalty Trust I, entering into early amortization late last year.

Securitization has been a boon to banks looking to manage their loan exposures and free up capital, and Jeffrey Stern has played a significant role in the development of that market over the last 10 years.

Year to date as of Jul 30 Term (days) 07/24 07/25 07/28 07/29 07/30 1-week