The European ABS market pipeline continued to swell last week, but the limited number of issues pricing promises a busy year-end market. It is estimated that over E14 billion of new securitization issues are currently being marketed.
"There are a lot of deals out there and we hear that banks are planning to bring more. But honestly, most market players expected September to be a lot busier than it was," said one market source.
Late September saw CDO marketing at a high. Market sources said that issuers are likely deciding that now is better than never, but it remains to be seen how much paper will actually price. "Investors are beginning to show renewed interest in CDOs, with many deals better structured to meet investor requirements and clearing at cheaper levels," said Deutsche Bank analysts.
So far, the E779.1 million synthetic CMBS, Duke 2002 ltd., priced its class A3 paper at 37 basis points over the three-month Euribor last week. West LandesBank managed the transaction, which priced its split-rated class A4 piece at 43 basis points over, its class B piece at 55 over, its class C at 83 over, and the class D notes at 175 basis points over.
The synthetic static CDO Iliad Investments Plc Series I also priced last week. The BNP Paribas-managed transaction priced its triple-A rated class A notes at 30 basis points over, the double-A plus rated class B notes at 60 over, and the single-A class C notes at 75 basis points over.
Price talk was given for the GBP1.5 billion Promise C transaction, a German CLO to small- and medium-sized companies. The Class A, triple-A rated notes have price talk between 35 and 40 basis points over, and talk on the double-A rated notes is in the 60 to 65 basis points range. Price talk on the class C, single-A rated notes was at 95 to 105 basis points over, and pricing on the triple-B rated class C notes was in the 200 to 225 basis points area.
Marketing for a E1.4 billion auto loan receivables securitization began last week. Cars Allians Funding Plc is backed by French auto loans originated by DIAC - a captive entity of French car manufacturer Renault. ABN AMRO and Societe General are co-managers on the deal. According to sources, DIAC is one of the two largest auto loan credit companies in France.
Going forward, market sources have speculated that the receivables originated by Renault captives in other European countries could potentially be securitized through the same SPV. The structure allows for a number of series of notes backed by loans originated by DIAC to be issued over the next six years.
