A market anomaly in underlying benchmark yield curve dynamics has caused two-year auto paper - historically the most difficult sell in the capital structure - to be shortened slightly and indexed off EDSF rather than interbank swaps. The investor community has demanded this structural change in reaction to current secondary-market quoting methods.

The most recent transaction to experience this phenomenon was last week's $1 billion series 2003-5 deal from American Honda Finance, which saw its A3 notes structured to a 1.95-year average life. It was the second time this year Honda has used the structure, following its Oct. 23, 2003-4 offering. Since the start of November, auto securitizations from DaimlerChrysler and Nissan Motor Credit have also utilized this structure.

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