A loaded pipeline described last week's ABS market, as just three deals totaling $1.9 billion priced by press time, indicating that despite a desire to get deals done, more players were focused on packing for the asset-backed conference in Bermuda.
"We're not getting a lot of volume," admitted one trader. "It's clearly not what everyone expected for September."
Traders felt that issuers were meek and hesitant, as was the feel for most of September, which at one point was expected to be the year's busiest month as issues crowded the market ahead of the fourth quarter, when Y2K fears are expected to be at their height.
Of note, on Wednesday the ABS market felt its first dose of Y2K worry, when the three-month Libor leapt 57 basis points overnight, as it extended into the year 2000 (see story p. 1).
Deals That Went
Providian Financial Corp. priced last week with a deal originally planned $555 million credit card-backed securitization, which increased in size to $600 million because of strong investor demand, according to published reports.
"The deal went very well," said a banker working on the deal. "It priced substantially tighter than initial guidance."
The senior class was $500 million, had 2.95-year average life and was priced at a spread of 96 basis points over Treasury, while the $55.5 million, 3.11-year Class B priced at 60 basis points over one-month Libor. An additional $50 million, 3.2-year triple-B-rated tranche sold a day later at a spread of 125 basis point over one-month Libor. Credit Suisse First Boston led the deal with Chase Securities as co-manager.
Though demand was high for Providian, Green Tree Financial Corp., which was scheduled to price on Wednesday, came to market a day later and priced at spreads two to five basis points wider than initial talk.
The $636.5 million deal, which was managed by Merrill Lynch & Co., was structured in two parts: a $605 million, 3.11 year A-class tranche that priced at a spread of 35 basis points over one month Libor, and a $31.5 million, 3.19-year B-class priced at a spread of 65 basis points over one-month Libor.
Finally, Ikon Office Solutions sold $700 million in equipment backed bonds. Unlike Green Tree, the spreads were on the narrow end for Ikon. A $238 million, 0.44-year tranche priced at a spread of 18 basis points over six-month Libor, well within the initial talk of 18 to 20 basis points. An A-3B tranche, a 2.1-year, $244 million class, priced at a spread of 36 basis points over one-month Libor, within initial guidance. The five part deal, with a financial guaranty by Ambac Assurance Corp. was managed by Lehman Brothers.
Deals That Almost Went
At press time, Citibank was set to go with a mostly privately placed deal, along with Educational Finance Group, which was readying a $229 million student loan-backed transaction.
Also expected is Commercial Net Lease with a franchise deal in October. According to sources, Greenpoint Financial is also readying a deal, along with Group Franchise Finance Corp., Equicredit, Aames Financial Corp., and Saxon Mortgage Inc. (see p. 2).