Now that Centex Corp. has finalized its sale of its Fairclough Homes U. K. home building operations to Miller Homes, the company is also exploring strategic alternatives, for its subprime home equity lending group, Centex Home Equity Co. This would allow Centex to focus more on its core home building related businesses. Goldman Sachs has been retained as advisor in the potential strategic alternative, the company reports and "there can be no assurance that this initiative will result in a CHEC transaction."
Bear Stearns analysts report that Centex home equity ABS spreads have not reacted to the news. While analysts expect any effect to be minimal, they cautioned investors to keep track of the situation. Operational risks caused by the transition of Centex's subprime servicing division, although slight, could result in spread volatility depending on the ultimate buyer, analysts said, noting that as of 2Q05, Centex's subprime servicing portfolio was valued at roughly $10 billion.
