It was mixed feelings on the ABS trading block last week - the same old song thus far in the fourth quarter. The pipeline was loaded, spreads continued narrowing, and the market saw a bit more activity than the week prior, though that isn't saying much.
At press time, total issuance reached $3.2 billion compared with the prior week's $2.3 billion in issuance.
One trader described the market as quiet, explaining that people were looking for quality paper, and there just wasn't enough of it.
"There hasn't been a lot," he said. "And I don't see a lot next week. It's shut down."
Of note, New York City's tobacco-backed bonds came to market last, and were significantly oversubscribed, said Allen Anders, director of public finance for New York City (see story page 1).
Some Good Deals
Utilities continue hitting the market, and, sources said, Texas looks to be the next hot spot in the first quarter of next year. Last week, Pennsylvania thrust another bolt with West Penn Power Co., which came with a $600 million deal backed by revenue streams associated with consumer power bills.
The transaction, rated triple-A, was structured in four tranches. A one-year, $74 million A-1 class priced 23 basis points over the 12-month EDSF, well within the initial talk of 23 to 26 basis points. A three-year, $172 million A-2 class priced within talk at 83 basis points above Treasurys.
The deal slipped wide of talk at the longer end, however. A 5.5-year, $198 million A-3, priced at 82 basis points over Treasurys, barely within talk; while the 7.8-year $156 million A-3 class priced at 89 basis points over Treasurys, two points outside the 82 to 87 basis points guidelines.
Overall, the West Penn deal, which was managed by Morgan Stanley Dean Witter, priced significantly tighter than the PP&L Resources Inc. deal that closed in July, according to published reports.
Out of the credit-card sector, Citibank priced the week's largest deal, a 33% oversubscribed, $1.06 billion transaction. The largest chunk of the two part deal was a five-year, $1 billion triple-A-rated tranche that priced at 80 basis points over Treasurys. A smaller $64 million single-A rated tranche priced 105 basis points over Treasurys. Salomon Smith Barney managed the sale.
With only Union Acceptance Corp. as the rep, the auto sector showed little market share compared with previous weeks. UAC priced a $300 million fixed-rate transaction structured in five parts. Average lives ranged from 0.27 years to 3.82 years, and volumes ranged from $18 million to $82 million. The largest piece, the one-year A-2 class priced 39 basis points over EDSF. Banc of America Securities managed the transaction.
CAK Universal Credit Corp. continued its rigorous domination of tabloid deals last week, with Bill Blass, Leonard Cohen, and whole slew of undisclosed brand names the company was readying for securitization (see story page 1).
At press time, the pipeline was still full, with a few names left over from the week before. Barclaycard was set to go with a $1 billion, sterling-denominated credit card-backed deal. General Motors Acceptance Corp. was roadshowing a $305 million home-equity deal. Carlye High Yield Partners was still on the sidelines with a collateralized bond obligation.
