European ABS primary market issuance was fuelled last week by a number of large RMBS deals, with spread indications still pointing to strong investor demand. The performance has many believing the market is set to keep on ticking up to the rapidly approaching gathering in Barcelona next month.
Northern Rock's granite deal priced last Wednesday, and based on the demand, dealers were able to upsize the transaction to GBP3.65 billion (US$6.48 billion) from GBP3 billion (US$5.33 billion) originally on offer. An extra triple-A sterling tranche was added onto series 2, and price talk for the euro and sterling pieces tightened at the beginning of the week. Industry players noted weaker demand for dollar-denominated triple-A notes that saw the Class A 0.6-year notes price at four basis points over Libor, at least one basis point wider than price guidance. Its 1.8-year piece priced at seven basis points over, also one basis point wider than guidance levels. The euro and sterling pieces priced at 14 basis points, and the triple-A sterling piece priced at 16 basis points over Libor, respectively.