The recent merger of Franchise Mortgage Acceptance Co. and Bay View Capital Corp. may set into motion a series of regular franchise-backed securitizations, the first of which could be expected to price late in the fourth quarter, said sources at both companies.

"If we decided to go forward with the $500 million securitization," said David Heaberlin, executive vice president and CFO of Bay View, "it could be the largest franchise securitization to date."

Since early this year, Bay View has been aggressively acquiring FMAC's franchise loan portfolio, said Heaberlin, the value of which is nearing $800 million.

"We are acquiring an entity that has been a very active securitizer in the market," said Jeff Butcher, manager of investment relations at Bay View. "We will continue FMAC's history of securitization."

FMAC has been a local in the ABS market place since 1996, issuing three times in 1997 and seven times in 1998. Combined, FMAC has priced roughly $3 billion in trade receivable and lending-backed bonds. According to Heaberlin, FMAC would have continued issuing in 1999, had Bay View not been buying up the debts.

Meanwhile, Bay View, a relatively new face in ABS market news, has issued only once prior, a $250 million auto-loan offering that priced in 1997. "The plan was to be a regular periodic securitizer of auto loans," Butcher said. However, he explained, because of balance-sheet changes, Bay View decided to portfolio the loans themselves.

"Our reasons for securitizations are not income," said Heaberlin, "but to diversify risks."

Alternatively, Heaberlin stressed the possibility of a whole-loan sale to end the year, as opposed to an ABS deal; however, he promises, if Bay View decides to issue, it'll issue big.

"We would be in the position for much larger securitizations," said Heaberlin. "A lot of players don't have the historical track record that FMAC does."

FMAC's loan portfolio includes fast food and casual dining restaurants, such as Taco Bell, Wendy's, and Applebees. Collateral for an ABS deal would be restaurant equipment, property and the value of the franchise itself. The pending fourth quarter securitization would most likely be managed by Credit Suisse First Boston, said Healberlin.

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