The asset securitization market did not exactly come roaring back last week from its spring break. While market professionals hoped that the market would produce about $14 billion in new issuance by week's end, it actually came in at about $5.2 billion by press time.

Bear Stearns brought a $713 million home equity loan deal to market, through a deal called BS ABS Trust 2006-HE4. The three-year tranche priced at 17 basis points over the one-month Libor in that deal. On the same day, ironically, Fitch Ratings downgraded four classes of Bear Stearns home equity ABS paper from early 1999, saying that over collateralization on the affected groups had been substantially reduced. It might be another three to six months before the over collateralization is depleted, at which point the losses would begin to work their way though the subordinate bonds. Confirming Fitch's concerns, remittance reports from March 25 showed substantially larger losses than average, said a source familiar with the situation.

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