Although this month's primary lineup may be somewhat overshadowed by activity in the secondary markets, it's likely that new deal issuance will nonetheless set a January all-time record, market sources said.

According to traders, there was a flurry of activity in the secondary market for short-term, dollar-denominated European ABS paper, while investors were awaiting the $4.8 billion RMBS from Northern Rock. "Despite the positive tone expressed in secondary markets, we expect that 2003's first quarter will mark a very large new-issue calendar, including postponed 2002 deals," said analysts at Royal Bank of Scotland. "Primary market activity may keep spreads from experiencing a great deal of tightening."

Forming part of the expected first quarter lineup is a deal for Southern Pacific Securities backed by U.K. non-conforming residential mortgages that will likely carry a monoline wrap on the bonds. Also expected is an RMBS deal for Portugal-based Banco Internacional do Funchal (Banif) dubbed Atlantes Mortgage 1.

Exchequer Partnership priced $265 million equivalent of bonds rated triple-A last week. The secure transaction led by RBC priced within guidance at 83 basis points over 2025, 5% index-linked Gilt. The single tranche carries an Financial Security Assurance wrap and a maturity date of July 13, 2036 with an average life of 24 years, sources said.

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