The first deal of the year priced last week, and although demand was strong enough to inch spreads in another point or two, there wasn't a whole lot happening, said traders on the desk.

"It's just not been a colorful week," one investor commented. "Gray at best."

Last year, by the end of week two, five deals had priced for a total of nearly $3.4 billion, according to the ASR database. Compare that with the one deal for $1.15 billion seen thus far, and it seems to be a quiet market.

"There have been some bid lists and those have sort of come and gone," one investor said. "They've consisted of short to intermediate home-equities, manufactured housing, some auto transactions. I'm assuming they've been absorbed by somebody, although we haven't bought any of them so I'm not sure who has purchased them."

There is, however, an evolving pipeline, according to market sources.

"There are rumored to be a handful of CLOs to be coming to market relatively shortly," a trader said. "There's a couple of home-equity deals that should be coming to market, but really not a whole lot of transaction activity at this point."

The Deal Of The Year

Secondary Market Services issued the first deal of the year, worth $1.2 billion and backed by student loans.

"The transaction was a huge success," said a spokesman for Credit Suisse First Boston, the bank that managed the sale. "It was met with very good reception both in the U.S. as well as throughout Europe. In a period of 24 hours from the announcement of the transaction, the deal was three times oversubscribed in both of the tranches that we were offering. That gave us the ability to upsize the size of the transaction and tighten spreads concurrently."

Of significance, as part of the structure of the transaction the bonds were uncapped, meaning that there is no cap on the coupon that will be paid to investors.

Additionally, this deal was the first SMS transaction in years that was rated by Standard & Poor's Ratings Services, the spokesman said.

Moody's Credit Card Conference

At a presentation last week by Moody's Investors Service, analysts said public term credit card volume is expected to rise to $50 billion this year, from $39 billion in 1999.

A big chunk of that, however, will refinance deals that mature this year. These figures are based on a survey of issuers.

The breakdown will be the same as in previous years: 95% bank-cards and 5% retail cards.

And what about the Fed?

"If interest rates were to go up due to Fed tightening, that could raise interest rates on credit card securitizations and make the funding more expensive," said Jay Eisbruck, vice president and senior credit officer at Moody's. "If this happens, issuers might reconsider going to the asset-backed market and use other sources of funding that might be cheaper."

The market may look forward to a more smooth-sailing year, Moody's said. Because of the Asian crisis of 1998 and Y2K concerns in 1999, issuance levels have been on an uneven trek for the past two years.

"Unless a dramatic economic event or social upheaval happens this year, we expect issuance to be more evenly distributed throughout the year," said Vice President and Senior Credit Officer Mark DiRienz.

Also, since many bigger players have bought smaller entities, a lot of the growth in the market will be coming from purchased portfolios rather than direct solicitations, Eisbruck explained.

The subprime sector will reign this year "It's an area of concern for us because these low-to-moderate income people haven't really had these levels of debt before so only time will tell what's going to happen in times of stress," DiRienz said.

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