Secondary trading in prime RMBS remains solid, said market sources, indicating the preference for high quality consumer receivables in the market right now. Granite 2002-2 securitization, for example, saw good secondary market trading for both Euro and Sterling tranches. "Initially we thought that the substance of support would be much broader, but it looks like deals that are off-the-run are also off the track," said one market analyst.
According to the Royal Bank of Scotland, off-the-run names are finding it particularly difficult to access the market. While a few CDOs have been placed, they are said to have priced wider than anticipated. "Investor confidence in non-bulleted or subordinated tranches is flagging, leading to three R's: restructuring, repricing and remarketing just prior to launch," said the bank. "The market appears of two minds."
The MPS transaction has been in the market for some time now and priced its E1.74 billion securitization of Italian consumer loans last week with structural changes. The Class A1 tranche priced at 23 basis points over the three-month Euribor, two basis points tighter than original price talk. But this was achieved by increasing the tranche by E87million and axing a class A2 tranche that had an average life of 5.5 years. A shorter triple-A rated, A class was added to the deal. The 5.3-year tranche priced at 40 over the three-month Euribor.
The longer class B and C notes encountered less positive reception and were priced outside original price talk at 80 basis points for the double-A piece, 90 basis points for the single-A plus piece and 120 basis points for the single-A minus tranche.
"There is an interest that has developed for short bullet tranches and there is less interest for tranches that are further down the credit curve," said the market analyst.
Telecom Italia is said to be snipping and re-accommodating its intended E1.2 billion property securitization. The deal is being executed with Italian property company Bene Stabili. IMSER 60 now features a wrap from monoline insurer Ambac. It's likely that the deal will be similar to British Telecom's securitization of a 30-year rental income stream from assets that are critical to the UK fixed-line network. That transaction was rated as a whole business securitization and carried a monoline wrap from Ambac. Also rumoured on the telecom front is a trade receivable securitization for European mobile phone operator Orange, which would mark the first mobile phone receivables deal in Europe.
Sweden is seeing its first securitization of the season - a E269 million RMBS for Framtiden Multi Family Housing, the fourth transaction launched to date. AB SEB and Svenska Handelsbanken will co-manage the single-tranche offering. Also in the pipeline is a CMBS via HypoVereinsbank out of the Netherlands.