Before ABS market participants could pack up the golf clubs and head west to Arizona, there was business to be done last week, as supply totaled more than $7 billion. Credit card and home equity deals dominated the pre-conference landscape.
With a few notable exceptions, however, transactions that made the rounds tended to be smaller in size, with a suspicious lack of auto-loan deals.
Motorcycle manufacturer Harley-Davidson, which sold $550 million of fixed-rate notes via Salomon Smith Barney as lead, was one of the outliers last week. The three-tranche offering offered investors shorter duration paper that sold quickly and tightened across the board prior to pricing. Harley's first offering of the year priced on top of comparable auto paper, with one-year A1 pricing at a spread of 12 basis points over EDSF and 2.8-year A2 pricing at 13 basis points over swaps.
In credit cards, which saw $1.6 billion of supply last week, Bank One N.A. contributed $1.2 billion of supply with two offerings on consecutive days - each of which was increased in size. Wednesday, BOIT sold $1 billion of five-year 2003-A1 triple-A floaters at 12 basis points over one-month Libor, which was increased from $750 million. The next day BOIT sold $200 million of five-year triple-B rated fixed-rate subs to yield 160 basis points over swaps. The sub tranche was increased from $100 million.
Earlier in the week, MBNA Bank America also brought a five-year triple-B credit card offering, but instead offered investors floating-rate notes. The second triple-B rated sub offering of the year from the MBNAseries trust, priced via JPMorgan Securities at 160 basis points over one-month Libor - 10 basis points inside its most recent seven-year triple-B deal, which priced Jan. 16.
Out of the market since November of 2001, sporting goods retailer Cabela's Inc. offered just its second-ever credit card ABS, a $300 million floating-rate deal via Wachovia Securities. The 2003-1 transaction, backed by a full MBIA wrap, priced its single tranche at 30 basis points over one-month Libor, in line with initial guidance.
Home-equity supply totaled $4.2 billion in fairly active trading that included a pair of net-interest margin securitizations. The largest trade, $1.96 billion of floating-rate supply came from mega-issuer Long Beach Mortgage through Deutsche Bank Securities and Lehman Brothers jointly. The indicative 2.6-year floating-rate A2 class priced at 40 basis points over one-month Libor, showing evidence of improved demand for home equity paper.
The third deal of the year for GMAC-RFC, a $700 million fixed- and floating-rate deal via JPMorgan, was the second from its RAMP issuance shelf. The short-term floater priced one basis point inside of Long Beach, pricing a $400 million 2.9-year, Ambac-wrapped floater at 39 basis points over one-month Libor. To date, GMAC-RFC has priced $2.98 billion of mortgage-related supply.
Proving that excess capacity from the collateral acquired in the whole-loan market last year, MSDW Capital Corp. priced its second deal this year, both backed by New Century Financial-originated loans. The deal saw solid demand, tightening in all classes rated higher than triple-B. The triple-Bs, however, needed to cheapen by 20 basis points to clear at 375 over one-month Libor.
Impac Mortgage also brought a $350 million securitization of first-lien MBS product through Countrywide Securities. The first offering of the year from Impac contained a pair of Ambac-wrapped seniors and an unwrapped triple-B sub tranche. The two-year wrapped triple-A priced at 40 basis points and the three-year wrapped triple-A priced at 50 basis points each over one-month Libor.
Option One Mortgage and Credit Suisse First Boston issuance vehicle ABSHE were in the market last week with a pair of NIMs, one wrapped to a triple-A the other proud to show of its triple-B minus rating. Option One priced its $191 million 1.05-year Financial Security Assurance-wrapped deal at 39 basis points over one-month Libor. ABSHE, on the other hand, priced a fixed-rate NIM, with an average life of 0.84-years, at a significant discount to yield 9.50%.
One student loan deal priced last week, a $1 billion 2003-1 transaction from Nelnet, which has become almost interchangeable with Sallie Mae on a spread basis. Nelnet's first trade of the year priced through the joint leads of Banc of America Securities and Deutsche Bank. At the front-end of the curve, Nelnet priced its deal on top of the most recent Sallie Mae deal, seen the week before. But out on the curve Nelnet can't keep up yet, lagging the benchmark issuer by three basis points for seven-year paper and priced 10 behind for double-A rated subs.