Spring break and observances of major religious holidays suppressed the primary ABS market for the second consecutive week, resulting in a mere $5.7 billion in issuance by Wednesday afternoon. That fell short of trader estimates, which put issuance between $8 billion and $10 billion.
"Spring break has been the key driver. There is a total of about three deals in the market," said one trader. "Next week we're anticipating a much bigger and better week."
Aside from the number of deals that priced by Wednesday afternoon, market players did not expect any new issuances for the rest of the week, as many market professionals were expected to be out of the office for Easter and Passover observances.
"What you see is what you're going to get," for this week, said one trader.
Aside from the underwhelming flow of deals, the ABS market was left "breathless," as Bear Stearns put it, by spreads on the ABX that tightened across the board since its launch. Triple-B spreads, in particular, tightened by about 200 basis points over the two previous trading days, Bear Stearns analysts wrote in the Across the Curve report published last week. Spreads among triple-A subprime paper has tightened by about seven basis points, leading Bear Stearns to speculate that "the anticipation of reduced supply over the remainder of the year has forced most players into front-loading their acquisitions for the year."
TAL Advantage, a subsidiary owned by TAL International Group, brought a $680 million equipment lease deal to finance maritime shipping containers. Credit Suisse and Fortis Capital acted as lead managers on the offering; a 144a deal with a five-year term that came in at 19 basis points over the one-month Libor. Purchase, N.Y.-based TAL International Group plans to use the funds to refinance its existing series of notes from 2005.
Textron Financial's Floorplan Master Note Trust provided a ripple of excitement in the market, according to one trader, when the issuer increased the size of the deal, which was done through Citigroup Global Markets. The paper priced at the tight end of guidance, with the senior class coming in at seven basis points over the one-month Libor.
The credit card sector managed to make a showing, as Chase Issuance Trust placed $175 million of paper via JPMorgan Securities. The triple-B rated deal was priced at 23 basis points over the one-month Libor for the three-year piece.
From the home equity sector, GMAC-RFC RASC came to market with a $770 million deal, via GMAC-RFC Securities. The one-year piece in that deal priced at six basis points over the one-month Libor.
Sallie Mae priced a $2.6 billion student loan ABS, via Credit Suisse and Morgan Stanley. Priced against the three-month Libor, that deal's one-year tranche came in at eight basis points over.
As for deals on the new issue calendar, market players awaited another $2.8 billion in deals, including several home equity and a scratch and dent transaction as of press time.
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