Despite summer breaking into the third quarter -- typically marking a slow August overseas -- the U.S. ABS primary market rallied in the three-month period ending Sept. 30. More than $138 billion of ABS was placed with investors -- nearly 60% of which was backed by mortgage product.

Fueled by both the continued flow of dealer principal finance issuance vehicles and multiple transactions from independent lenders, the mortgage sector of the entire ABS market accounted for nearly four times the supply of autos, the next largest asset class. Real estate came in at just over $82 billion.

While real estate ABS topped the list over the same period last year, supply for 3Q03 was nearly double its number in Q302. At $47 billion in 3Q02, the mortgage sector accounted for roughly half of the total market.

With roughly $22 billion, auto loan collateral was next the next largest asset type distributed to ABS buyers in the third quarter. Autos made up 15.9% of the total market, a shrinking proportion versus the similar period the year before. In 3Q02, auto loan collateral made up an almost identical amount of supply, $22.4 billion, though that figure accounted for 23.5% of the market.

Credit card supply totaled just over $12 billion 3Q03, accounting for 8.8% of the market as a whole. In an interesting twist, credit card supply was greater in this year's third quarter -- $12 billion versus 11.6 billion in Q302 -- but made up a shrinking percentage of the market, 8.8% versus 12.2% in 3Q02.

One of the contributing factors for the ever-growing ABS pie this year has been the explosion of student loan product. Making up $10.5 billion of the ABS primary in 3Q03, student loan supply contributed to 7.6% of the total. While this is $4 billion greater than the same period last year, it only accounts for a marginal percentage increase in the overall market, 7.6% versus 7.3% in Q302.

Another area of growth last quarter was dealer floorplan receivables. While not even hitting the radar screen in Q302, dealer floorplan collateral accounted for more than $3 billion in the three-month period, good for 2.3% of the total market. The infrequent nature of issuance, however, should prevent wholesale dealer loan collateral from blossoming into a major proportion of total issuance. Dealer floorplan supply throughout this year has been driven primarily by 2000-vintage floorplan transactions maturing, and the need for auto lenders to refinance the roll-off.

Not surprisingly, the "other" category of assets makes up a shrinking proportion of the market, 5.4% this quarter compared to 7.1% in Q302. But, in a surprise statistic, the amount of "other" assets has increased to $7.5 billion from $6.7 billion in Q302.

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