The post ABS East primary ABS market started off slow last week, with just one transaction kicking around as of Tuesday's market close. But as has been the case throughout the two MLB league championship series, the action developed late and was worth sticking around for.
Total primary market volume topped $7 billion in the holiday-shortened trading week, with larger home equity deals leading the way. Home equity issuance sat at $3.8 billion as of Thursday's close, of which just $650 million had priced, but the remainder was expected to do so late last week or early this week.
The high-quality collateral backing Redwood Trust's Sequoia Trust quickly passed through the market. Redwood priced its $458 million A1 class, with a 3.88-year average life, at 31 basis points over one-month Libor, while the $180 million A2 class, with a 3.87-year average life, priced at 33 basis points over six-month Libor. Morgan Stanley and Merrill Lynch jointly led the sixth Sequoia securitization deal of the year.
Equity One Inc. was set to price Friday its $1 billion offering via Credit Suisse First Boston and Wachovia Securities - which had an active week of underwriting business. Equity One's three-year floater was talked in the mid-30 basis point area over one-month Libor and its two-year fixed-rate seniors were seen pricing in the low-to-mid 50 basis point area over comparable swaps.
GMAC-RFC was also expected to price $1.3 billion of subprime MBS from its RASC shelf via Bear Stearns' lead, while Australian mortgage lender, Interstar Millennium was heard with an $800 million single-tranche global MBS offering via Barclays Capital.
Four credit card deals priced last week, totaling $3.8 billion. MBNA America Bank got things started with its $100 million triple-B subordinated floater. The series 2003-C7 deal, via JPMorgan Securities, priced at 135 basis points over one-month Libor.
Later in the week, Capital One Financial's COMET issuance shelf brought $500 million of fixed-rate paper via Wachovia. The three-
ear COMET 2003-A6 priced to yield 12 basis points over swaps, tightening one basis point from initial guidance.
Late in the week, Bank One N.A. priced $650 million of five-year fixed-rate 2003-A9 senior notes to yield 3.897%, or seven basis points over swaps, following an increase in size from $500 million. Shortly after pricing, Bank One was back in, announcing $1 billion of five-year senior floaters, its tenth triple-A offering of the year. Price guidance had not been disseminated as of press time, and pricing was expected Friday.
The auto sector, which accounted for $540 million, only consisted of one true loan deal, combined with a dealer floorplan deal.
AmeriQuest Mortgage auto lending unit, Long Beach Acceptance Corp., was marketing a $250 million fixed-rate transaction via Citigroup Global Markets, backed by a full FSA wrap. Additionally, Mitsubishi Motor Credit had its first dealer floorplan deal of the year, totaling $290 million.
The other sector of the market consisted of a motorcycle loan deal from the only motorcycle-loan securitizer and a small business loan securitization, from the most frequent business loan securitizer.
Harley-Davidson's $300 million fixed-rate deal, a first-time lead mandate for Wachovia Securities, went well, as Harley's deals typically do. The fourth ABS of the year from Harley saw its $187 million one-year A1 class price at five basis points over EDSF and the $98 million three-year A2 class price at seven basis points over swaps.
Business Loan Express was marketing its third business loan ABS of the year, also via Wachovia. The $200 million 2003-2 offering was backed by an interesting mix of collateral, including a large proportion of Amresco originated business loans (see related story, p 8).
This should just be the start of what is expected to be a busy month-and-a-half ahead of Thanksgiving. Many attendees of the recent ABS East gathering noted the numerous issuer/investor sit-downs as having the market pumped for the fourth-quarter stretch run.