Business in the ABS market continued to come out of its summer slowdown last week, as market players expected to see between $10 billion and $14 billion in new issues hit the market.

As usual, the home equity securitization sector dominated production in the primary market. Some market players reported increased demand for the non-investment grade, Ba1 classes of home equity loan floaters, especially from CDO managers looking to ramp up on the paper for their mezzanine deals. Some triple-B-minus tranches, meanwhile, were beginning to soften. Some traders were seeing guidance near 200 basis points for that paper, compared to two weeks ago, when deals in that category were getting done at 180 basis points.

Merrill Lynch's Specialty Underwriting & Residential Finance came to market and priced with its three-year triple-A tranche coming in at 15 basis points over the one-month Libor. The triple-B, 4.55-year average life portion of the deal came in a 95 basis points over the same benchmark. The bank also acted as lead manager on its namesake Merrill Lynch Mortgage Investment Trust transaction. The triple-A rated, 1.19-year average life piece priced at 28 basis points over the one-month Libor. Long Beach Asset Holding Corp., collateralized by net interest margin loans, came to market via Washington Mutual Capital Corp. The simple structure featured a .55 average life tranche that will offer investors a flat 6% coupon.

Countrywide Securities represented itself on a couple of deals from the Countrywide Asset Backed Securities trust that totaled $2.4 billion in issuance. The series 2006-14, a home equity loan transaction, saw its one-year tranche come in at five basis points over the one-month Libor, while the 4.94-year average life tranche priced at 205 basis points over the same benchmark. The transaction collateralized by home equity lines of credit, series 2006-S4, appeared to sell a little cheaper to investors, with the one-year, triple-A rated tranche pricing at 11 basis points over swaps. Meanwhile, the 5.48-year average life piece came in at 55 basis points over the same benchmark.

Origen Manufactured Housing floated $103 million of ABS debt via Citigroup Global Markets. The single-tranche deal, with an average life of nearly two years, got triple-A ratings and priced at 15 points over the one-month Libor.

GMAC-RFC's RAAC completed a $291 million transaction backed by 24-month seasoned home loans, via Credit Suisse, with Residential Funding Corp. acting as co-manager. Its tidy triple-A ratings notwithstanding, investors appeared to drive a hard bargain for the notes. The one-year, triple-A piece priced at eight points over the one-month Libor, while the 4.55-year average life piece came in at 120 basis points over the same benchmark.

"This was one of those one-off deals that required a lot of analysis from investors, to get comfortable with the collateral," said one professional familiar with the situation. "To get that deal done, 8% was where it had to clear."

The Structured Asset Securities Corp. completed a $1.1 billion deal, via Lehman Brothers. On that transaction, the 0.84-year average life transaction came in at five basis points over the one-month Libor. The 4.64-year average life tranche came in at 230 basis points over.

Sallie Mae priced a $3.1 billion transaction secured entirely by consolidated student loans. Credit Suisse, Lehman Brothers and Wachovia Securities acted as lead managers on the transaction.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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