With Monday a closed session, the market saw truncated trading last week - as two top-tier auto issuers and a late surge from three notable credit card issuers brought the week's supply. Roughly $8 billion made the rounds in a late-to-pick-up primary market, as most expect issuance to pick up in the third month of the quarter.
The week's largest offering came from DaimlerChrysler, which sold its first dealer floorplan deal of the year, a $2 billion offering brought through Morgan Stanley. This move bucked the trend of joint lead roles that developed in the tail end of last year and continued into this year.
While most recognize DaimlerChrysler's CARCO floorplan platform, this offering came from a new shelf for the captive. DaimlerChrysler Master Owner Trust, which got the okay from regulators May 6, used one-third of its $6 billion capacity - roughly the pace at which DaimlerChrysler issues floorplan notes. (see story p.5)
The single-tranche transaction, with a three-year average life, priced in line with guidance and came in at six basis points over one-month Libor. Although three-year floating-rate credit card supply has been scarce this year, DCMOT 2002-A priced on top of a mid-tier card issuer, investors said, as recent fixed-rate three-year card deals from Citibank and Bank One have priced at four over swaps.
Also out of the auto sector, the market saw supply from a top-tier prime issuer which rivaled the sector's tightest levels of the year, a top-tier non-prime issuer and an off-the-run subprime deal.
Chase Auto brought a $1.4 billion prime loan deal, its second of the year and tested the waters for super-prime issuers that was set by BMW just over two weeks ago. Chase priced on top of BMW in all its senior classes, with the exception of the two-year.
In non-prime autos, AmeriCredit Corp. brought $1.2 billion of supply through JPMorgan Securities and Merrill Lynch jointly. This was the third ABS of the year for AmeriCredit, the second to feature a full FSA wrap. While spreads for AmeriCredit were just seven basis points back of Chase for one-year paper, more trouble surfaced in the two-year part of the curve, causing the A3 class to widen to 24 over Swaps, versus initial talk of 20 to 21 over.
While the three-year part of the curve had been the tough sell in the auto sector of late, investors, who had gobbled up two-year paper from BMW and Honda - driving those classes one tighter for each deal - said they had shifted their focus and were now moving out on the curve.
Franklin Auto, boosted by the single-A unsecured rating of its parent, Franklin Resources, priced a non-prime auto deal inside of where AmeriCredit got done out on the curve, to the tune of seven basis points for two-year supply. But the relatively small tranche sizes - none greater than $75 million - indicate a small, issuer-specific investor base.
Driven by reverse inquiry interest, Citibank, Capital One and MBNA, each brought deals relatively late in the week. In the retail sector, Sears was feeling out the far end of the curve, which in the face of all the five-year supply, had been relatively untested.
While as of press time the single-A-rated five-year from MBNA via Merrill was the only deal to be completed, Citibank, Cap One and Sears were all on track for a Friday pricing.
In RMBS-related activity, Equity One was the only issuer to price a deal as of press time, selling $283 million of fixed- and floating-rate senior/sub notes via Wachovia Securities. But IndyMac Mortgage's Home Equity Mortgage Loan Trust and M.H. benchmark Vanderbilt Mortgage were each marketing transactions through Credit Cuisse First Boston.
With the second rental fleet deal in as many weeks, Cendant Corp. unit Avis Group Holdings was poised to wrap a $650 million fleet lease deal, also via Wachovia. And after a delay that saw the creation of an additional double-A-rated B class, HFG Healthco-4 priced its $100 million four-year deal, backed by Blue Cross/Blue Shield payments, via Morgan Stanley.