Close to $11 billion of new issue supply priced last week in a three-day flurry of pricings, with continued strong demand for top-tier credit card names, accounting for half of last week's issuance. It was a solid week for the monolines as well, with seven of the transactions backed by at least partial guaranties, and five of those with full wraps.

While the upper crust of the market need not seek out a monoline, issuers that are susceptible to headline risk due to the sector in which they operate or the name itself have sought out wraps in order to be on the safe side, sources said.

"Right now, with what we have seen in corporates, there is a lot of noise out there," said one buysider. "When that is the case, in order to guarantee the best execution we tend to see offerings that, under more stable conditions, would be senior/sub."

Last week, in the not-so-hot but rebounding rental fleet sector names such as Dollar-Thrifty (see story p.1) sought out surety protection. Also, non-prime lenders Household Finance, WFS Financial and The Metris Companies all brought wrapped offerings. In home equity, Irwin Financial and AmeriQuest Mortgage each included partial wraps - a trend that until recently was limited to the CDO sector - wraping certain classes of transactions while still offering subordinated tranches.

While demand last week was fairly evenly distributed among asset classes, the credit card sector saw the most supply roughly $5.2 billion. Of the four deals that made the rounds in the sector, three came from captive bank issuers. Bank One, Chase and Discover all brought demand-driven offerings, while Metris unveiled its long awaited offering in the form of two separate deals. All four saw heavy demand that led to increases in size.

Bank One, with its second drawdown from its new issuance vehicle, brought a three-year fixed-rate senior deal-the first fixed-rate transaction from the issuer since the 1998-9 issue that priced in December of 1998 from the then First USA trust. With the tight print, Bank One demonstrated the economic advantages of the de-linked vehicle pricing the single three-year tranche at four basis points over swaps, on top of where Citibank priced a comparable three-year offering the previous week.

Chase and Discover each brought floating-rate deals, Chase tapping the seven-year part of the curve and Discover the five-year. Chase sold $1.5 billion of floaters, with the seniors pricing at 17 basis points over one-month Libor; Discover priced its five-year seniors at 11 basis points over Libor.

After a couple weeks of market chatter, Metris finally brought its first public term ABS of the year, following a lengthy roadshow that had investors eagerly anticipating the deal. Metris priced its $900 million three-year 2002-3 at 30 basis points over one-month Libor and the five-year 2002-4 at 38 over. While the three-year priced in line with initial talk, the five-year moved out a half a basis point as a reward for investors who eagerly snapped up the paper.

In addition to this transaction, in January Metris sold $600 million of credit card-backed notes in two direct to investor placements and has recently closed a conduit facility totaling $850 million for a total injection of $2.95 billion in liquidity. On April 17 Metris had its senior unsecured debt rating cut two notches to single-B-plus, from double-B-plus by Standard & Poor's, citing increased regulatory scrutiny from the Office of the Comptroller of the Currency.

"This had a very good response from the buyside. The company was pleased with the broad distribution, which was a roughly 50/50 split between U.S. and European investors," said Bill Haley, a managing director in the N.A. ABS group at JPMorgan, who led the company on its recent roadshow. "This demonstrates conclusively that Metris has access to liquidity in the asset-backed market, which should make the (unsecured) debt and equity holders very happy."

Two large, wrapped, non-prime auto loan deals hit the market last week, including the first ever wrapped auto deal from Household and WFS Financial which has tapped FSA for all of its past ABS. Spreads, while quite cheap versus the super-prime offerings the week of May 13, stayed firm to indicative levels. Demand for short-term 2a7 supply remains quite strong, with both deals yielding four basis points under Libor just one outside of where BMW Motors sold its money market tranche.

In Home equity, Long Beach Mortgage, Lehman's Structured Asset Securities Co. (Sasco), Option One Mortgage and Irwin Financial priced deals, with AmeriQuest Mortgage pricing two.

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