Tis the season to be ... shopping,' and not to be outdone by mere retailers this time of year, credit card ABS issuers rolled out the merchandise for their customers.
Primary issuance marched on at a steady clip last week, and as December came to a close, market observers expected about $20 billion in new deals to come to the market last week. At least three credit card deals priced by midweek, and another five were expected, including a $1 billion transaction from the Bank of America Credit Card Trust.
"Issuers were just finding pockets to hit," one trader said. "They were just kind of knocking out the bids. As for trade sizes, none of them were huge."
Although small in size, the 10-year $500 million Citibank Credit Card Issuance Trust impressed the market when it achieved pricing at four basis points over the three-month Libor. Citigroup Global Markets was lead manager on that transaction, and Credit Suisse acted as co-manager.
"It has to be the richest 10-year trade ever done," one professional said. Maybe so, but the $1.1 billion Chase Issuance Trust 2006-A7 was no slouch, either. Although it is a much shorter bond, at four years, it priced at one basis point over the one-month Libor. The other Chase card transaction, series 2006-A8, was a $500 million transaction that came in at six basis points over. JPMorgan Securities acted as lead manager for both deals.
Home equity loans usually make up the majority of issuance most weeks, but the asset class virtually flooded the market with new offerings ahead of the year's end.
"We expect liquidity to start drying up certainly after next week," one trader said. "From the middle to the end of next week, there could be some liquidity challenges."
Market players acknowledged some volatility in pricing for synthetic ABX single-name CDS, as most acknowledged trepidation for the future of certain HEL deals. Still, the selling process was fairly orderly for the cash market, where investor demand held its integrity amid perceived risk in the riskier pockets of the housing market and the RMBS sector.
Countrywide Securities had a busy week, acting as lead manager on no fewer than four deals totaling $5.3 billion. Its Countrywide Asset-Backed Certificates 2006-25 deal priced its one-year, triple-A rated piece at seven basis points over the one-month Libor, while offering yield-hungry investors 750 basis points for its most junior tranche on that transaction.
New issuer Sonic Capital came to market via Lehman Brothers with an $800 million transaction backed by commercial business loans. The offered portion of the deal, a five-year tranche, priced at swaps plus 25 basis points. Education loan issuer Student Loan Trust was in the market with a $3 billion deal, and CPS Auto Trust was circulating a small $196 million transaction.
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