European investors kept their attention focused on the primary market last week, with no let up in the deal flow expected anytime soon.

Pending multi-currency RMBS deals included Paragon 8, a buy-to-let transaction worth the equivalent of GBP850 million from U.K. mortgage lender Paragon Group, and Leek 14, which is backed by mortgages from a unit of Britannia Building Society and worth the equivalent of GBP1.16 billion.

Deutsche Bank and JPMorgan Securities were the lead managers on Paragon 8, a buy-to-let transaction denominated in pounds, euros and U.S. dollars. The structure includes fast and slow pay triple-A notes. The one-year piece, to include both pounds and euros totaling GBP238 million, came with price talk of 10 to 12 basis points over three-month Libor. Price talk was at 20 basis points over for the 4.7-year piece, expected to divvy up GBP527 million among all three denominations.

The single-A notes, with an average life of six years, were worth GBP85 million, to be issued partly in pounds and partly in euros. The price talk was at 70 basis points over.

JPMorgan and the Royal Bank of Scotland were leading the Leek deal, which also offered notes in pounds, euros and U.S. dollars. The bulk of the deal - GBP674 million - was in a triple-A tranche with a three-year average life. Price talk was anticipated this week, with the benchmark expected to be three-month Libor.

BNP Paribas researchers said they continue to see good appetite for quality consumer loans and leases.

BBVA Autos 1, a 1 billion deal for the Spanish bank BBVA, initially came with price talk of plus 15 basis points on the 3.4-year triple-A. BNP Paribas said early last week that it looked like a good pick-up to the VCL-7, which recently priced its 1.5-year triple-A at plus eight.

By Thursday, the price talk for BBVA Autos 1, which was being managed by BBVA itself and JPMorgan, had come in slightly. The 3.4-year Class A notes, worth 950 million, were at Euribor plus 13 or 14 basis points. The revised price talk also tightened the 5.4-year notes, with the double-A rated Class B at mid to low 20s, and the single-A rated Class C at low 30s.

The deal is backed by fully amortizing new car loans averaging 8,293.

Several noteworthy deals also priced last week. Barclays Capital wrapped up RMS 19, yet another multi-currency RMBS transaction. The deal, backed by U.K. nonconforming mortgages from Kensington Group, was upsized to the equivalent of GBP700 million, an increase of GBP50 million over the initial amount.

The 1.1-year, triple-A notes, totaling GBP155 million, priced at three-month Libor plus 11 basis points. The 3.4 year, triple-A notes included GBP204 million pricing at Libor plus 20 basis points, and 183.3 million at Euribor plus 19 basis points.

"Examining the Class M and B notes, a significant spread differential existed between euro- and sterling-denominated notes," Royal Bank of Scotland researchers said about the deal in their daily market commentary. "The pari passu Class M2 notes priced at Libor plus 70 basis points and Euribor plus 60 basis points for a 3.6-year average life, while the pari passu Class B notes priced at Libor plus 110 basis points and Euribor plus 100 basis points."

The deal also included a GBP125 million, triple-A tranche that was privately placed.

At 2.5 billion, Locat Securitization 2 was the largest deal to price lately. "Locat continued to raise the bar for benchmark issues in the lease sector, having set it at over

1.5 billion at the end of 2001 through its first transaction," BNP Paribas researchers wrote about the deal.

Italian leases are generally looked at as SME deals, the researchers said, and the pricing of Locat appears to reflect that thinking. The 5.3-year triple-A, worth 2,374 million, priced at three-month Euribor plus 18 basis points, with the 12.1-year single-A, worth 126 million, at plus 55. The lead managers were HSBC, SG Corporate Investment Bank and UBM.

"Given the rarity of new issues in the Italian lease sector and the decent pricing, the triple-As have already tightened to plus 17, another all-time low for this issuer's spreads at that maturity," BNP Paribas noted.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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