With $12 billion in asset-backed securities in the market, last week was the heaviest week in terms of issuance so far this year. Supply continues to enter the market at a robust pace, and demand is strong enough to digest it all, sources say. This week, market observers are expecting an equally strong showing.

Citibank's much-anticipated all-subordinate credit card deal priced Monday, after increasing the amount of the offering to $1.3 billion from $850 million. The deal also priced tighter than talk levels.

"They came up with some early price talk that certainly got the attention of a lot of investors," said Jeff Salmon, head of asset-backed research at Barclays Capital. "And I think what happened was precisely what they wanted: there was a lot of investor interest, a lot of demand," which enabled Citi to increase its tranches and price the deal tighter.

"Citibank is oftentimes cited as one of those credit card issuers which is one of those benchmark mainstay-type issuers; because they have been absent for a period of time, that also helped," he added.

The subordinate B-classes and C-classes offered this week are paving the way for a $1.5 billion triple-A rated offering from Citibank, rumored to price sometime this week. "It's certainly within the realm of Citibank; they have been able to get things priced very quickly," Salmon said.

The deal is also whispered to be joint-led by Salomon Smith Barney and Merrill Lynch & Co.

Also rumored to be in the market is Delta Funding Corp. with a home-equity deal. Though no specifics on the transaction were available, observers would not see the return of Delta as a big surprise.

Last week, though, the market saw a great deal of new issues cutting across all sectors, maturities and structures, said one ABS trader, while another coined the week as "plucky." With that, demand was good and spreads held their own.

"I wouldn't say that spreads are any firmer, but they definitely aren't significantly wider either," said an ABS trader. "I think there's a couple cases where things are a little bit softer, but you can't say that spreads are significantly wider, which I think is good news."

"Last week and this week in particular are certainly living up to expectations: A lot of supply, a lot of different names, sizeable deals. Spreads, both fixed and floating, are holding in pretty good," added Salmon.

Quarter-End Slowdown

However, with third quarter ending this Friday, the pipeline appears to be slowing down, at least until the second week of October.

"Overall, the early feeling is that deals are going well, things are getting priced. Investor demand seems to be pretty good," Salmon said. "The ABS market's in really good shape right now. The middle of [this] week, we'll see things kind of slow down a little bit."

"There seems to be a lot of people out there with cash to put to work and it seems they have a great appetite for short amortizing product that a lot of asset-backed stuff tends to be," added an ABS trader.

Along with the Citibank deal, other large deals in the market included a $2.3 billion auto deal from Ford Motor Credit. A $1 billion auto deal from Associates First Capital also priced last week.

A high-tech equipment-backed transaction from The CIT Group also priced really well in the market. "It went overall pretty good," said one market observer. "The technicals were pretty positive for the deal to get done and price."

Also well received last week was a $700 million equipment lease deal from Royal Bank of Scotland's Arran Two.

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