Asset securitization professionals did not have a huge workload awaiting them after the Independence Day holiday last week, as a mere $6 billion in potential new issuance was being marketed. Some market professionals predicted that just $3 billion in new issuance would price by week's end.
By press time, a tiny $26 million scratch and dent deal came to market from CWL-2006-SD2, via Countrywide Securities. The 4.70-average life tranche priced at 115 basis points over the one-month Libor, while the tranche benchmarked against swaps came in at 900 basis points over.
Aside from that, South Carolina Student Loan Corp. was prepping a triple-A rated $500 million deal via RBC Capital Markets. Also, HSBC was readying a $1 billion home equity loan transaction.
Otherwise, several ABS professionals said they expected the week to be extremely quiet, owing to artificially heavy issuance, especially in the home equity loan sector, leading up to July 1. On that date, Standard & Poor's began requiring more credit enhancement on certain home equity loan deals that it rates.
"That, along with quarter's end and July Fourth was a recipe for no volume," one trader said.
Still, new ABS issuance being circulated last week came from the home equity sector. Paragon was circulating a GBP1,500 ($2.75 billion) transaction and SG Mortgage Securities Trust via Societe General, was marketing a $1.8 billion deal.
While waiting out the slow market, word began circulating in earnest that Citibank might at last issue bonds from the $29 billion private label credit card portfolio that parent Citigroup Inc. bought from Sears, Roebuck & Co. in 2003. Citibank officials would not confirm those plans. Although market players, including buysiders, expected a deal to be completed in the third quarter, they could not specify the size of the potential deal. Sears was one of the biggest issuers of retail credit card ABS, and if Citibank follows through as expected, it would give a much-needed boost to issuance, said one market professional.
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