Northern Rock priced its latest Granite deal on the tight end of price talk after having upsized the deal by 50% to GBP6 billion ($10.5 million) early last week. The deal, market sources say, sets a positive tone for the year.
Traders at Dresdner Kleinwort Wasserstein noted that the Class A6, which priced at 10 basis points over the three-month Euribor, was trading several times around 9.5 basis points, and the Class A8, which priced at 12 basis points over three-month Libor, was also trading half a point tighter at around 11.5 basis points. "This should be seen as a very positive signal to the market considering the upsizing and tightening of price talk on the deal, as it demonstrates that the depth and quality of the final book must have been second to none," said traders at the bank.
Several new deals began lining up before January's close. Among them is a sterling-denominated auto securitization from Fidis's U.K subsidiary, Fiat Auto Financial Services. A-Best 3 is expected to have GBP280 million ($491.7 million) of notes on offer backed by a pool consisting of 57.6% Fiat and 7.2% Alfa Romeo branded cards - 52.9% are new and the rest are used vehicles.
British Land has announced that it plans to refinance Werretown Supermarkets, the sale and lease-backed CMBS for Sainsbury's. There is currently just under GBP608 million ($1,067.9 billion) of fixed- and floating- rate bonds outstanding. The restructuring will involve the redemption of existing floating-rate notes, and the exchange of existing fixed-rate notes for notes issued by a new vehicle, BL Superstores Finance PLC.
The original Class A2 notes rated AA by Standard & Poor's and Fitch Ratings will be exchanged for new notes rated AAA. The original Class B2 and Class B3 notes rated BBB- and BBB respectively, will be exchanged for new notes rated AA. According to analysts at the Royal Bank of Scotland, the spread benefit of the upgrade will be shared approximately two-thirds for investors and one-third for British Land as part of an exchange of the coupons. BL Superstores Finance will issue new floating-rate notes both to replace the existing ones and to raise additional debt. They will include GBP81 million ($142.2 million) Class M1 notes rated double-A, and GBP70 million ($122.9 million) Class C1 notes and GBP50 million ($87.8 million) Class D1 notes, both rated triple-B.
Marketing is underway for Opera Finance (CMH), a 375 million ($452.5 million) Irish CMBS for Eurohypo backed by a loan to Real Estate Opportunities. The loan financed 16 retail, office and shopping centers - one in Cork and 15 in Dublin - and has a 75% LTV. The notes are all offered with seven-year average lives, including 250 million ($301.6 million) of triple-A rated notes, 50 million (60.3 million) of double-A notes, 40 million ($48.2 million) of single-A rated notes and 35 million ($42.2 million) of triple-B notes.
Some new CDOs also hit the market last week. Mizuho Leveraged Finance Group is marketing its 550 million ($663.7 million) leveraged loan CLO, Harvest III. The deal includes 364.8 million ($440.2 million) of 8.6-year triple-A rated notes and four subordinated tranches rated from double-A to double-B. New Amsterdam Capital began marketing Mercator, and a private equity CFO, SVG Diamond II, was being marketed last week for SVG Advisors.
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