FirstCity Capital Corporation has postponed its planned $300 million home equity transaction due mostly to lower than expected volumes on the acquisition end, and partly because of recent softening of spreads in the ABS market.

The Valhalla, N.Y.-based firm had planned to stroll to market in April or May with a Lehman-led deal, but was forced off the path after production levels dipped a bit at the firm's correspondent lenders.

"First quarter production was a little lighter than expected," said CEO James H. Aronoff.

Aronoff said the firm's transaction should benefit from the wait, as the market is just a tad jittery under recent volumes of new issuance. The deal is now set to launch in the third quarter.

"It's one of the luxuries of being a smaller company," he said. "We try and execute when there's room and we can maximize the pricing available to us."

Aronoff did admit that lower production was the driving factor behind postponing, but also said his firm was being extremely selective in the collateral it was purchasing of late.

The May deal was the first part of a plan to ramp up ABS issuance 124% at the firm, a strategy that called for securitizing $700 million in HEL for '99. The firm has a $400 million deal scheduled for November. - SK

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