Though corporate woes continue to pressure spreads wider, it's done little to contract the primary issuance pipeline, dealers seem determined stay on the radar - approximately 15 billion ($19.3 billion) of new issuance was actively marketing last week despite the General Motors Corp./Ford Motor Co. shake up the week before. Some of the ABS heavy hitters were ready to swing away as early as the beginning of the week.
Northern Rock said it planed to move ahead with its GBP3.75 billion ($7.15 billion) multi-currency RMBS via its Granite master trust and HBOs is expected to bring its securitization shortly that should offer investors an equally sizable chunk of RMBS paper. Even GMAC-RFC began marketing a new transaction that will offer investors access to German mortgage loans via a true-sale structure.
It's becoming less of an issuers market, as dealers are pressed to make terms more attractive for investors and have widened guidance on several transactions in the past weeks. Dutch RMBS spreads have softened by several basis points and industry sources said they anticipated spreads would remain near current levels as the market retained some negative bias. "We've seen slightly unstable pricing, wider even than a few weeks ago. Look at the Dutch deals Candide for example, it has grown to 14 basis points and it is pretty much at market level," said one industry analyst.
By week's end the Dutch deals were clearly experiencing more softening on the senior level while mezzanine tranches widened by one basis point. Dealers priced the triple-A rated senior class of the 1.5 billion Candide transaction at 15 basis points over Euribor, while the double-A notes priced at 18 basis points over. The single-A notes priced at 23 basis points over Euribor and the triple-B notes priced at 44 basis points over.
Dutch MBS XII, saw its triple-A and double-A rated notes price at 12 and 14 basis points over Euribor, respectively. At the single-A and triple-B levels the notes priced just one basis point within the Candide deal. Guidance for Obvion's 1.78 billion Dutch RMBS deal, STORM 2005-1 saw the A class notes talked in the 14 basis point area over Euribor.
Caixa Catalunya's 1.5 billion Spanish RMBS Hipocat 8, priced its fast and slow pay triple-A rated tranches at four and 14 basis points basis points, respectively, over Euribor. Price guidance was also released on the Canary Wharf Finance Tap, with the 6.3-year, double-A rated, B class talked in the low 30 basis point area over Libor, and the 6.8-year single-A notes talked in the 50 basis point area over and the triple-B notes are being offered in the low 80 basis point area over.
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