While new-issue supply in the U.S. ABS market grew nearly 30% over the same period in 2002, growth was limited to a pair of asset classes — real estate ABS and student loans — in the fourth quarter 2003 (see supplement).
As could be expected, mortgage-related ABS increased by more than 61% versus 4Q02 and student loan ABS increased further -- 68.3% versus the same period the year before, according to data provided by Thomson Financial. Auto ABS was flat and credit card supply saw a 32% decline.
Fueled by the tail end of the refi boom, mortgage ABS accounted for $83.6 billion of the $141 billion in total supply seen throughout the quarter. Investment bank principal finance vehicles made up the bulk of mortgage ABS supply, as dealers continue to hurry inventory into the market before interest rates begin rising.
GMAC-Residential Funding Corp. priced 10 transactions in the quarter, for more than $11 billion, which included its $851 million RMAC deal, backed by U.K. mortgages, via Barclays Capital. Four deals priced from RMAC-RFC's RAMP shelf, totaling $5.27 billion, plus two offerings from its RASC shelf, totaling $3.4 billion.
The student loan ABS sector accounted for $10 billion of the quarter's total, up from the nearly $6 billion priced in 4Q02. With four transactions throughout the quarter, Sallie Mae drove the growth in student loan ABS. Sallie's tendency to bring multi-billion dollar sized deals led to more than $8 billion of the total. Also pricing smaller transactions throughout the quarter were The Pennsylvania Higher Education Authority, Collegiate Funding Corp., N.C. Education Authority, Education Funding Inc. and College Loan Corp.
Although the auto sector remained flat versus the similar period the prior year, numerous issuers tapped the market for the first time. Marshall & Ilsley Bank's M&I Auto Loan Trust priced its $850 million 2003-1 offering Nov. 5 via Credit Suisse First Boston. Hyundai Motor Co. completed its $753 million 2003-A deal Oct. 29 via joint lead managers Banc One Capital Markets and Citigroup Global Markets. And Nissan's only auto lease ABS priced Oct. 21 through JPMorgan Securities.
Dealer floorplan collateral saw a 31% spike from the 4Q02, with $1.3 billion of new issue supply. Captive auto lenders BMW Motors, Mitsubishi Motors and Nissan each priced their respective firms' only wholesale inventory loan-backed deals the year. For Nissan, the $950 million Nissan Master Owner Trust 2003-A through Morgan Stanley on Oct. 2 was the lender's first-ever dealer floorplan ABS. Mitsubishi's $290 million 2003-A deal via Deutsche Bank Securities replaced its previously amortized series 2001-1 deal. Additionally, Bombardier Capital's $500 million floorplan transaction, backed by consumer, commercial and recreational vehicle products, priced Dec. 10 through joint leads Banc One and JPMorgan.
Although the credit card sector experienced a 32% decline in supply in 4Q03, the market saw the largest-ever card ABS, twice. When Chase Manhattan Bank upsized its series 2003-6 deal to $2 billion from the initial $2.5 billion on Oct. 24, it became the largest pricing the sector had ever seen. Then, on Nov. 20, Citibank N.A. topped Chase with a $2.5 billion five-year 2003-A9 deal, which was upped from its initial $2 billion.
Also in 4Q03, Providian Financial's Gateway Master Trust made a return to the market after a one-year hiatus. PGMT's $500 million series 2003-A deal priced Dec. 9, via Barclays. UBS structured a private $130 million series 2003-1 deal for CompuCredit Corp., backed by a liquidating pool of Fingerhut-originated accounts.