Investor demand might not have forced issuers to bring a lot of deals to the ABS market last week, as new pricings totaled just $11 billion. Traders and other market professionals, however, said the deals' warm reception kept spreads reigned in tightly across all sectors.

"Maybe there were a couple of weeks of low issuance, but there is definitely heavy demand now," said one trader. "All classes are going well.

Aside from the usual onslaught of home equity loan ABS deals, investors heartily went for the GE Dealer Floorplan Trust 2006-3, a $1 billion dealer floorplan transaction on which Deutsche Bank acted as lead manager. Also in the auto sector, the self-led Goldman Sachs Auto Loan Trust completed an $833 million transaction. While the top tranche, rated P-1, A-1+ and F1+, was sold to the asset-backed commercial paper market and achieved a Libor plus one spread; the triple-B rated piece came in at 45 basis points over the EDSF.

HEL dominates again

As usual, the home equity loan sector dominated issuance. The HSI Asset Securitization Corp. Trust priced an $829 million deal, via HSBC. Spreads on the one-year, triple-A piece were at five basis points over the one-month Libor, while the 4.15-year piece came in at 195 basis points over the same benchmark. HSBC also acted as lead manager on the Household Home Equity Loan Trust 2006-2, a $1.2 billion home equity loan transaction. The 2.39-year, triple-A piece priced at 15 basis points over the one-month Libor. The Residential Asset Mortgage Products priced a $688 million deal at slightly higher yields for investors, via Banc of America Securities. Its triple-A, one-year piece came in at seven basis points over the one-month Libor, while the triple-B, 4.73-year piece got a 165 basis point spread over the benchmark. Merrill Lynch Mortgage Investors Trust sold its double-A rated, 6.24-year tranche at 33 basis points over the one-month Libor. The triple-B rated tranche achieved a 235 basis point-spread over the same benchmark.

The Carrington Mortgage Loan Trust priced a $1.58 billion deal via Bear Stearns, which also got a five-point spread on its triple-A rated piece.

Among the week's most attention-getting transactions were the Philadelphia Housing Authority was preparing a deal via JPMorgan Securities; a huge $2.6 billion student loan deal from Sallie Mae; and a $180 million transaction from Jersey Central Power & Light, via Goldman Sachs. The housing authority and utility transition deals were among the transactions that stood out simply because of their collateral.

"I would say I have not seen anything on the transition side for six months," said one trader.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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