After a sluggish 1Q05, European ABS volume is back on track and analysts report that a healthy visible pipeline could hoist volumes for 2005 above January forecasts. The European Securitization Forum said issuance in the European securitization market totaled 48.1 billion during the first three months of the year, a 13.8% decline from 55.8 billion issued over the same period last year. But a strong primary rally over the past weeks is sure to cushion recent issuance volumes.
According to Dresdner Kleinwort Wasserstein, year-to-date volume currently stands at 113 billion, with supply dominated by RMBS (48%). CMBS (17%), arbitrage CDOs (10%), balance sheet CDOs (7%) and subprime MBS (7%) make up the difference. CMBS issuance this year stands at 19.3 billion, only 1.2 billion short of the 2004 full-year total. Balance sheet CDO supply has been driven by two recent jumbo deals, Geldilux-TS- 2005 from HVB and the SME CLO/MBS deal BBVA Hipotecario 3, and currently amounts to 61% of the 12.7 billion full-year 2004 total.
According to DrKw, the strong primary market of the past few months brings public issuance volume for this year to 113 billion, 14% ahead of the tally taken at the end of the first half 2004. With 14.2 billion in the publicly known near-term pipeline, analysts at DrKW said year-end volumes for 2005 could very well exceed their year end forecast of 230 billion.
Germany's pension deal priced last week, offering investors 2billion more that the original issuance size. The 8 billion deal is one of the largest securitizations in Europe and is expected to count towards Germany's budget deficit. Deutsche Bank Securities and Morgan Stanley managed the sale for Bundes-Pensions-Services fur Post und Telekommunikation eV, which manages pension payments to employees of the former Deutsche Bundespost, the once state-owned post and telecoms operator which later dissolved and was privatized. The issue priced at the middle to lower end of price talk for every tranche - all three tranches paid a premium over generic pfandbrief or covered bond levels. The Class A notes priced at four basis points over Swaps, the Class B notes priced at nine basis points over and the Class C notes came in at 11 basis points over Swaps.
Italy is marketing its third CMBS deal this year. The 1.9 billion funding from Fondo Immobili Publici is part of a wider real estate privatization program carried out by the Italian Ministry of Economy and Finance and is the first deal to be sponsored by the Ministry using a closed-end real estate investment fund. Marketing is also underway for Vela Lease 2, a 1 billion Italian lease backed deal for Locafit. The deal will offer investors 920.5 million of 5.2-year Class A notes along with nine-year dated single-A and triple-B notes. The provisional pool is split into 65% real estate, 26.5% equipment and 8.5% auto leases.
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