The ABS market has seen a deluge of transactions from the various asset classes, although the auto sector still has the lion's share of the pipeline.
Previously Wells Fargo analysts were expecting an increase in primary market activity this week based on the market entering "the home stretch" for this year between now and Thanksgiving. Others cited low borrowing rates that make it attractive for consumer ABS issuers to come to the ABS market.
Ford Credit Canada is out with a C$502 million auto ABS with Bank of America Merrill Lynch and RBC Dominion Securities as lead managers.
This follows after AmeriCredit Financial Services priced its auto transaction yesterday with Barclays Capital, UBS Securities, and Wells Fargo Securities as lead managers.
Co-managers on the $850 million deal were RBS Securities, JPMorgan Securities and Credit Suisse.
Other auto securitizations include: auto lease offering BMW Vehicle Lease Trust 2010-I, which priced yesterday as well; Nissan Auto Receivables 2010-A Owner Trust, which just priced its deal this afternoon; and Drivetime Auto Owner 2010-1.
The Auto Advantage
In a recent research report, Citigroup Global Markets analysts said that within a consumer ABS sector portfolio market weight allocation, they are suggesting overweighting autos versus credit card ABS.
Although senior auto ABSs are still tight to the 10-year adjusted mean, the firm's updated analysis reaffirms that the asset class should outperform credit cards in the stress scenarios Citi looked at.
The firm's analysis pointed to the relative attractiveness of autos. The sector benefits from some curve roll down versus bullet-like securities such as credit cards and stranded assets, analysts wrote.
Additionally, as shown by the current and recent pipeline of ABS deals, autos are generating a better source of new-issue asset-backed supply, which makes it easier for the market to employ this strategy.
According to Citi analysts, year-to-date auto ABSs comprise roughly $40 billion in supply, versus only $4 billion in credit card ABS as well as a few billion of stranded assets.
Other Deals in the Market
Credit cards are also seeing some activity with Discover Card Mater Trust I and Cabela's Credit Card Master Note Trust 2010-2 pricing deals.
Other sectors and issuers are also represented with a student loan deal from Access to Loans for Learning Student Loan Corp., a FFELP offering that is lead managed by JPMorgan Securities.
Meanwhile, there is also an equipment lease-backed deal from GE Equipment Midticket LLC, 2010-1, which BofA Merill is lead managing.
Aside from GE. equipment services provider John Deere Capital has reportedly also accessed the ABS market. Meanwhile, regular securitizer Wyndham Worldwide Corp. is offering an unsecured 7.5-year straight bond deal worth $250 million.
Overseas, mortgages are in. Netherlands-based NIBC Bank priced its Essence III BV transaction on Sept. 10. Two mortgages deals from Australia (SMHL Securitization Fund 2010-3) and the U.K. (Arran Residential Mortgages Funding 2010-1) are also in the market.
Consumer ABS Volume Struggles
Despite the many deals that have come to market within the past four days, Wells Fargo analysts wrote in research released last week that the consumer ABS sector is likely to struggle to reach the $100 billion mark in new-issue volume this year, which would be down from about $135 billion in 2009.
"We do expect 2010 to be the low-water mark for ABS issuance," they wrote. "Consumers’ reluctance to add debt, tighter underwriting standards and heavier regulation of ABS
have all contributed to this year’s underperformance, in our opinion."
According to analysts, the market would have to go all the way back to 1995, which was when consumer ABS was still in its “prehistoric” era, and with grantor trusts ruling the earth, to have new-issue volume that low.
They added that Term ABS Loan Facility or TALF funds have been sellers in recent weeks as these
buyers have been taking gains earned via tighter spreads and the rally in interest rates.
"Investor interest still seems to be bifurcated between liquidity needs in credit card and short auto ABS and off-the-run asset classes, such as floorplan ABS, to pick up additional yield," analysts wrote.
For further details about the above offerings, please see link below from the ASR Scorecard database.