The markets stopped the day the World Trade Center fell and while many try their best to return to some measure of normalcy, the apparent lack of issues in what should have otherwise been a robust September pipeline reflects the inevitable impact the attacks will have on volumes going forward.
Among the displaced issues that planned to debut deals this month is Northern Rock Plc's Granite Mortgages, led by Schroder Solomon Smith Barney. Plans for launching the GBP1 billion mortgage-backed bond last week took a back seat to the WTC attacks. The AAA-rated piece is being marketed with price talks at 22 basis points over the three month Libor. Its double-A-rated tranche is marketed at talks of 42 basis points and it triple-B piece comes at talks of 135 to 140 basis points. Its class S2-A piece is marketed with price talks at 24 to 25 basis points and its S2-B has price talks at 42 basis points.
In the RMBS wings with it is Stiching Pensioenfonds ABP's STReAM 1 that has also promised a September debut. Deutsche Bank, NIB Capital Bank and Morgan Stanley lead the deal. The transaction is being marketed with three Euro-based tranches totalling 1.549 billion and one $535 million U.S. tranche. No price talk was available at press time.
But as to quiet any fears that September issuance might be forsaken, Framtiden Residential Housing Finance No. 3 launched its 260 million issue late last week, reflecting renewed investor interest in triple-A tranches. As repercussions of the WTC attack unfold, market analysts say that it is likely that investors will continuously turn to such structures as a safe haven.
Lead mangers SEB Merchant Banking and Svenska Handelsbanken priced the deal close to original pricing talks. Its AAA-rated, five-year average life piece priced at 24 basis points; it was originally expected to garner pricing within 23 to 25 basis points.