Despite headlines of corporations looking to utilize asset sales in lieu corporate commercial paper, February marked the second consecutive decline in overall ABCP, down roughly $18 billion for the year, while the overall CP market is down $32.7 billion for the year.
"The pipeline is strong and I'm a little mystified that the volume is down," said Sam Pilcer, head of ABCP at Moody's Investors Service. Pilcer suggested that issuers might be taking their receivables out of conduits to the term market.
Such will be the case with the newly renamed The CIT Group, which plans to be a stronger force in the securitization market going forward, as it was throughout the 1990s. CIT will begin issuing public home-equity deals over the next few months, which it will bring to term from its recently closed $1 billion ABCP conduit facility via Credit Suisse First Boston and Citibank.
In this way, CIT is both a representative of a company increasing its use of ABCP, as well as a company pulling assets out for the term market. CIT is currently re-establishing its independence from Tyco International, as well as Tyco's balance sheet.
Interestingly, the company has not sold home-equity ABS in the public term market since 1998, last pricing a $350 million HEL deal via Morgan Stanley (then Morgan Stanley Dean Witter).
"Given the tight liquidity in credit markets seen currently, we feel that it is imperative to access securitization markets for funding," said Joe Leone, senior vice president and chief financial officer at CIT.