The U.S. ABS primary market kept pace in between conferences to price close to $11 billion last week as of Thursday's market close, as real estate ABS accounted for $4.5 billion of the total volume.
Fremont Mortgage was in the market with a $1.2 billion offering via Credit Suisse First Boston. The senior classes priced in line with expectations, while spreads on some of the mezzanine bonds tightened slightly. The three-year triple-A rated notes were on target at 24 basis points over one-month Libor, with the 6.43-year senior notes clearing guidance at 35 points over Libor. The double-A plus class, with a 4.65-year average life, priced tightened to 43 basis points over one-month Libor versus guidance at 45 points over Libor. The 4.51-year triple-B minus notes came on the tight side of guidance at 200 points over Libor relative to forecasts between 200 and 210 points over Libor.
NovaStar Financial tapped the market for $2.07 billion of home equity ABS, its first offering of 2005. Deutsche Bank Securities, RBS Greenwich Capital and Wachovia Securities shared the lead mandate. The 2.99-year triple-A rated notes cleared at 22 basis points over one-month Libor versus talk at 23 basis point area over Libor. The split-rated class M3 with a 4.82-year average life also priced inside of expectations at 51 points over Libor after being talked in the 52 basis point area over Libor. Down in credit, the triple-B rated 4.76-year subordinates - one notch lower (Baa3') by Moody's Investors Service standards - came in tight at 195 basis points over one-month Libor versus guidance in the 200 to 210 basis points over Libor area. But Moody's did not rate the triple-B minus B4 class with a 4.47-year average life, which priced on the outer limits of guidance at 575 basis points over Libor relative to talk in the 550 to 575 basis point range.
First Franklin Mortgage priced a $1.2 billion offering via Barclays Capital. The one-year triple-A rated notes came within guidance set in the 12 basis point area over one-month Libor. Toward the bottom of the capital structure, spreads came in with the 2.25-year subordinates clearing at 200 basis points over one-month Libor relative to talk in the 210 basis point area over Libor.
The auto sector continued to hum along to unremitting investor demand. Two transactions priced for the week, both led by Wachovia. Harley Davidson tapped the market for a $730 million series 2005-1 deal. Both the one and 2.87-year senior classes priced at one point under EDSF and swaps, respectively.
Subprime auto lender Drive Financial was in the market with a $400 million offering wrapped by MBIA. The 1.98-year triple-A rated notes came within guidance at 13 basis points over swaps and the 2.92-year senior class priced in-line with expectations at 18 basis points over swaps.
Investors met Sallie Mae's $2.02 billion student loan ABS offering via CSFB and Lehman Brothers with keen demand, as the one-year senior notes cleared guidance at two basis points under three-month Libor. Down in credit, the 8.94-year double-A rated subordinates tightened at 17 basis points over three-month Libor versus talk in the 19 basis point area over three-month Libor.
Also in the market was a $1.89 billion stranded cost offering from the Pacific Gas & Electric Co. The deal came via joint leads Citigroup Global Markets, Lehman and Morgan Stanley (see related story, p. 1).
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