ABS issuance showed no signs of slowing down heading into the final three weeks of 2000. Home-equity led the week, with four deals pricing. In all, by press time nine deals totaling over $4.7 billion had priced, with at least another seven totaling over $3 billion in the pipeline.
"I can't say I'm surprised by it," said Alex Roever, head of ABS research at Banc One Capital Markets. "We personally at Banc One were expecting an active December, and I think we got it."
Market observers pointed to the $1.3 billion Chase Manhattan Corp. auto receivables deal as the deal of the week. Chase had been the benchmark auto issuer in the mid 1990s, and has been out of the ABS market since 1998.
"I think that the execution Chase got on their auto deal really kind of is reflective of where you're seeing an overall market for good quality names, scarcity value," said an ABS trader.
The five-tranche deal priced in line with market talk, with the $292 million one-year tranche pricing at eight basis points over the 12-month Libor.
Elsewhere in the auto sector, Mellon Bank was marketing a $217 million deal, and PeopleFirst Auto was marketing a $525 million transaction.
"Those were complemented by the names we all recognize like MBNA and Citibank transactions and credit cards with Discover," said another ABS trader.
Citibank priced two reopenings last week, $250 million of its 2000-A3 trust and $750 million of its 2000-A2 trust. MBNA priced $462.5 million in notes in line with guidance, as its triple-A rated tranche priced at 15 basis points over swaps.
Discover was in the market with a $526.3 million deal and Spiegel was marketing a $600 million in credit-card ABS.
On the home-equity front, Saxon Mortgage Inc. priced $460 million in fixed and floating-rate notes. Centex had a $400 million deal in the market, and Sovereign Bank priced a $374 million deal. Those deals priced in line or tight of guidance.
United Airlines was also in the market with $1.5 billion in enhanced equipment trust certificates.
The first-ever issuance from NextCard was reportedly priced at a discount, with investors wondering why the deal wasn't wrapped.
All the new issuance left the secondary market practically neglected.
"Until new issuance clears out, people will be neglecting secondary positions," the trader said. "But I think that new deals will kind of run their gamut. Probably by the middle to the latter part of next week, most of them will have come to market, and a lot of people will kind of focus back on the secondary offerings."
Federal Reserve Chairman Alan Greenspan's remarks, removing its bias toward tightening, sent swap spreads in last week.
"People now are expecting one, if not two, Fed eases in the near term, and that's definitely going to help spreads out," an ABS trader said. "I think that spread tightening was offset by higher-than-expected supply and year-end pressures that we're seeing some dealers having year-end pressures as well as accounts."
"Greenspan's comments are getting everybody to think about what's a slower economy like? Are we soft landing? Are we hard landing? Trying to think about what, if any, implication that has for ABS," Roever added.
Going forward, expect to see more home-equity issuance before the year ends. "Most of the home-equity issuance got done this week," a trader said. "You may see one or two transactions, but I think it should start to tail off a little bit."
