Asset-backed commercial paper outstandings inched up last month to $669 billion from $665 billion in July, according to the Federal Reserve Bank. Outstandings had dropped $5 billion in July from the 2001 high of $670 billion.
Overall commercial paper outstandings dropped for the fourth consecutive month, shrinking nearly 3% to $1.40 trillion from $1.44 trillion. ABCP now accounts for nearly 47% of the market.
Separately, there's talk of two pending asset-backed commercial paper placements backed by loans to healthcare providers, both deals seeking ratings, sources said. These would be the first such deals to enter the conduit market without guarantees, a source noted.
The transactions, which are essentially variations on small business loan deals, are backed by loans to ancillary healthcare providers such as nursing homes, rehabilitation centers or surgical centers. The loans are supported by cashflows associated with the facilities, such as those from Medicare, Medicaid, health insurance companies and patients.
"From a ratings perspective, you're going to have to valuate the credit quality of the healthcare provider, as well as the cashflows that are securing the provider," said one rating agency source.
These deals will differ from existing healthcare finance securitizations, which have generally been backed by trade receivables originated by hospitals. In these deals, the finance company, such as National Century Financial Enterprise, purchases account receivables, which are owed the hospitals by insurance companies for services already provided. -