Last week the asset-backed market showed - on a relative level - vigorous activity, with year-to-date issuance nearly doubling numbers just one week back, according to preliminary figures from Thompson Financial Securities Data.
Traders were heard using words like "aggressive" to describe the secondary market.
And the heightened activity was "particularly seen in the floating rate sectors," said a trader on the desk. "That supports the fact that investors are very interested in the floating rate product. The floating-rate bid list we saw priced aggressively and traded aggressively as well."
The secondary flow picked up mid-week, according to a source, when $700 million to $800 million in floating-rate credit cards entered the bid, with average lives ranging from two years to seven years. By Thursday, nearly a billion in floating-rate paper had traded on the week, the source said.
Another trader cited a "good two-way flow" with spreads reeling in and an active buyside.
"As of right now spreads are probably a basis point tighter or so," said one trader.
"Most of the dealers are stepping up. I think there is still a lack of dealer inventory so they're looking for inventory to add to their positions," the source said.
"They want to be able to offer out bonds to some of their accounts. Paper on the whole is trading well," the source added.
The AmeriCredit Deal
Though the Fleet Bank credit card deal was well received by the market place, the AmericaCredit transaction was the "highlight for the week," said an analyst.
AmericaCredit planned to sell $420 million of two-year bonds at a yield of approximately 75 basis points above the Treasurys.
"Looking at the A-3's, which priced at 75 over, that would be about six to 15 back of where prime auto would be trading. Looking at the company's last deal in October, their tier on that deal priced at plus 105, its spreads have tightened 30 basis points," the analyst said. "But what's more interesting is compared to prime auto back then, the differential was 27 points in October and now it's 15."
AmeriCredit last came to market in October with a $900 million deal divided into three A-class tranches and managed by Credit Suisse First Boston.
"AmeriCredit is probably the most liquid subprime issuer and the dominant auto issuer in the market," added the source.
The Outlook
Although the market proved to be fruitful this past week, one trader foresees the coming week as being less active, with just one deal in the pike so far.
"Providian is on the table right now," said the trader. "That would be a credit card deal."
The upcoming Arizona conference may also have us seeing fewer issuances next week.
"I've heard a few people say that they want to wait until after the conference. The other thing in the way is the Fed next week. They're having their meeting and that will stop a lot of people from doing anything before they get a sense of where trades are headed."
