Alliance No.1 headlined last week's European market activity with a GBP100 million trade-receivables transaction that topped yet another point for U.K. innovation. It's the first sterling-denominated structure of this kind.
Alliance will be a special-purpose, bankruptcy-remote liability, public company that funds the purchase of receivables originated by UniChem Ltd and E Moss Ltd. Both the class A1 and A2 tranches were rated triple-A by Fitch and Standard and Poor's. The class B notes were assigned a single-A by both rating agencies.
The class A1 and A2 met price talk at +27 basis points and +30 basis points, both priced over the one-month Libor. The class B notes priced one basis point with original talk at +69 basis points over the one-month Libor.
Both UniChem and E Moss are subsidiaries of the Alliance Unichem Group. UniChem focuses on its parent company's wholesale sector and distributes pharmaceutical and healthcare products to pharmacies. The obligor for E. Moss is the state-operated NHS.
"Moss has adopted a trading strategy which focuses on developing healthcare services and advice at the local level with the aim of increasing sales of prescription medicines for which the NHS reimburses Moss," said Fitch. The class A1 notes will be serviced from these receivables, whereas the class A2 notes are corporate risk based.
While the summer holidays have certainly kept some away from their desks, the European market saw continued action that makes second-quarter predictions of buffed-up ABS volumes seem all the more likely. Morgan Stanley Dean Witter reports that with July issuance the market has almost reached the $59 billion dollar mark, 40% more than what the market reported at the same time last year.
The bank adds to the pot, pricing its GBP341 million CMBS transaction, Bromius (Eloc No.7). Distributed in six tranches of floating-rate notes, it priced its Class- A1 notes at +30 basis points and its A2 tranche came in 10 basis points wider at +40. Both tranches are rated triple-A by Moody's Investors Service and S&P, respectively.
The class B notes, rated Aa3 by Moody's and double-A by S&P, priced at +55. The class C notes priced at +90, receiving a single-A rating from S&P, and the class D notes priced at 30 basis points wider at +205, that is comparable to its tranche in the Eloc No.6 deal. A double-B rated class E tranche came in at a wide +600. All tranches were priced off of the three-month Libor.
While much of the deal maintained comparable spreads to its Eloc No. 6 predecessor, given the shorter average life tenor on the present tranches that ranged from one to three years, it priced at relatively wider levels. "We feel that the pricing reflects the concentration in the pool - just two mortgage loans - the quality of the lessees, the relatively low interest cover as well as the low demand for a complex ABS structure of such a short maturity," reported the fixed-income credit research team at Dresdner Kleinwort Wasserstein.
Eloc No. 7 refinances the acquisition of the U.K. property company Buford Holdings; the loans will be repaid from the sale of the properties.
Deutsche gives market Promise CLO
DG Bank was in the market last week with its EURO92 million collateralized loan obligation (CLO), Promise-Z 2001-1 that is related to a EURO1 billion portfolio of German loans. All notes priced within original talk. The class A notes rated triple-A by both Fitch and S&P priced at +28. Its class B tranche priced at +49 and was rated double-A by the rating agencies. The class C tranche priced at +70 and rates a single-A while the class D, which is rated triple-B, priced at +145. A class E1 and E2 tranche priced +145 and +390, respectively; both were rated double-B.
Also in the market last week was the EURO394.4 million Italian CLO, Colombo Srl, issued by Fonspa. The pool of public-sector loans priced relatively tighter than corporate-loan pools. The class A tranche priced at +12.5 and carried a two-year average life; its class A2 notes priced at +22 with a 7.7- year average life. The relatively long class B and C tranches, which have a tenor of 14.3 years, proceeded at +38 and +50. All tranches priced off of the six-month Libor.