E*Trade, the consumer finance arm of E*Trade Bank, has priced a $300.5 million offering backed by both recreational and marine vehicle collateral originated by Ganis Credit Corp., which will be the first transaction from the issuer to contain both collateral types since E*Trade acquired Ganis in 2002.

Lehman Brothers is the lead on the E*Trade RV and Marine Trust 2004-1 offering. Higher end recreational vehicles make up 83% of the pool, according to a presale report from Moody's Investors Service. Loss rates on this transaction are expected to be lower than on prior transactions backed by Ganis collateral due to the company's more stringent approach to writing loans, a ratings analyst said.

Credit enhancement levels on the transaction are typical for the sector. The A class notes will be supported by a non-declining fully funded reserve account at 1.5% of the original pool balance. Overcollateralization will start at 0.5% of the initial pool balance, and excess spread will be captured to increase overcollateralization to a target percentage of the outstanding pool to be calculated after the first 18 payment dates.

The senior notes are also supported by subordinate class B, C, D, and E notes at 3.25%, 3%, 3.5% and 2.25% of the pool, respectively, according to the Moody's report.

The pool is 62.4% newly financed assets and 37.6% used assets. Geographic concentrations exist in California and Texas, at 22% and 9% of the of the pool, respectively, and the average principal balance is $45, 682. Both of these collateral types are considered luxury items, analysts noted, making them more sensitive to economic downturns. Specific to marine assets, geographic concentrations that include both cold and warm weather states may increase the variability of loss, analysts wrote in the report.

On a portfolio basis, delinquencies have improved for both the recreational vehicle and marine segments. As of Sept. 30, year-over-year delinquencies had improved to 0.28% from 0.4% for recreational vehicles, and to 0.41% from 0.45% for the marine sector. Net losses for recreational vehicles remained unchanged for the same time frame at 0.27%, while net losses for marine rose slightly to 0.38% from 0.31%.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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