The primary U.S. ABS market appeared to be holding its breath along with the rest of the nation for the early part of last week, waiting on tenterhooks for the results of the presidential election to come in well into Wednesday afternoon. However, the market quickened later in the week to price roughly $7 billion as of Thursday's market close. The prior week saw upwards of $8 billion in new issues come to market.
The outcome of the election caused market participants to forecast little in the way of broad market movement. "A second Bush term suggests a continuation of present policies and little incentive to move the market outside the current range," analysts stated in a report from Credit Suisse First Boston.
Real estate ABS once again led the market to price close to $4.5 billion. NovaStar Financial was in the market with a massive $2.36 billion home equity offering via joint leads RBS Greenwich Capital and Wachovia Securities. The offering priced largely in line with expectations across the credit spectrum. On the senior end, the 2.56-year class A1B notes came with guidance at 40 basis points over one-month Libor, as did the one-year A2A notes, which priced at 19 basis points over one-month Libor. Mezzanine notes were also on target. The double-A plus rated notes, with a 5.02-year average life, priced with guidance at 62 basis points over one-month Libor. The split-rated M6 class - which Moody's Investors Service rated Baa1', two notches below both Standard & Poor's and Fitch Ratings - came on the tight side of guidance at 125 basis points over one-month Libor relative to talk in the 125 to 130 point area.
Down in credit, Moody's again rated more conservatively than its competitors by a single notch to assign a Baa3' grade to the 4.90-year B3 notes. Again, investors lapped them up, pricing the notes at 310 points over one-month Libor versus guidance in the 310 to 320 point over Libor range.
Also in home equities, Morgan Stanley hit with its $1.5 billion MSAC 2004-OP1 $612 million off of its dealer shelf. Meanwhile, Bear Stearns priced $612 million off of its BSABS home equity vehicle.
The auto sector accounted for over $2 billion in total new issue as of late Thursday. Navistar Financial tapped the market for $750 million backed by commercial truck loans via JPMorgan Securities. The senior/subordinated deal was upsized from an in initial $600 million. The transaction priced with or inside of guidance throughout the capital structure. The 2.09-year triple-A rated notes came in at 12 basis points over swaps relative to talk in the 13 basis point area over swaps. Down in credit, the 2.19-year single-A rated B class hit at 35 basis points over swaps relative to talk in the 38 area, while the triple-B notes of the same duration came in at 90 points over versus talk at 95 basis points over swaps.
DaimlerChrysler N.A. Holdings came with a $1.5 billion offering backed by prime retail loans via ABN AMRO, CSFB and Deutsche Bank Securities. The 0.25-year money-market tranche priced at one basis point under four-month Libor. Meanwhile, the triple-A rated 1.94-year notes came inside at one basis point over EDSF - reportedly the tightest print for a two-year auto ABS ever - relative to talk at two points over EDSF. The longer duration triple-A rated class A4 was also on the tight side of guidance at three basis points over swaps versus expectations of three to four basis points over swaps.
Traffic was relatively light in the credit card sector, with two transactions priced for a total of $450 million in new issue. Chase Manhattan Bank, N.A. was in the market with a pair of delinked offerings backed by its new combined Bank One/Chase trust via JPMorgan. The $350 million senior offering was upsized from an initial $300 million, pricing the 8.2-year average life notes in line with guidance at 12 basis points over one-month Libor. Additionally, Chase priced a $200 million five-year triple-B rated deal at 47 basis points over Libor also in-line with price guidance.
Advanta Corp. was also in the market with a delinked subordinate tranche, also through JP Morgan. The $100 million triple-B rated offering with a 4.94-year average life priced inside of guidance at 105 basis points over one-month Libor - 10 basis points inside of price talk in the 115 basis point area over Libor.
By week's end, a home equity loan deal from Finance America, a $125 million DriveTime subprime auto transaction, and a $1.5 billion Morgan Stanley dealer shelf transaction had been announced.
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