The broader bond market perked up in the face of a faltering stock market, and the ABS sector prepared to follow suit, with almost $15 billion in deals that priced and were being marketed last week. By press time, about $7 billion of that amount was launched.
Home equity loans usually comprise the bulk of issuance, but this time around, the credit card, equipment and student loan sectors took the initiative to get deals done. Bank of America Credit Card Trust, 2006-A6 came to market with a $1.6 billion transaction. Banc of America Securities managed the deal, whose triple-A-rated tranche priced at three basis points over the one-month Libor.
CNH Equipment Trust, 2006-1 came to market with a $750 million issuance, via ABN Amro. There, the Triple-A piece came in at six points over one-month Libor, while the lower-rated, 2.99-year tranche priced at 28 basis points over the benchmark. SLMA Student Loan Trust, 2006-6 came out, also via Banc of America. Credit Suisse acted as joint lead on last week's transaction, and expected to repeat its role as joint lead on another Sallie Mae $1.6 billion deal being marketed. The most senior tranche came in at one basis point below the three-month Libor, while the 11.75-year tranche priced at 21 basis points over. European investors continued to snatch up U.S. student loan-backed debt, as its 15-year, 369 million ($468 million) piece came in at 15 basis points over.
"People are dragging themselves back in," said one trader, citing the general summer holiday and vacation slowdown. Despite the current lull, sell side professionals were looking forward to an active August. "Generally, it has been a slow time in August, although for the past two years that has not been the case. We expect a lot more [issuance this August] than there was historically."
Still, the home equity loan market managed to chime in. Residential Funding Corp. was also prepping a $630 million Alt-A deal called RALI 06-QA6 for last week. According to someone familiar with the deal, the company was hoping to get the senior pieces out this week, and sell the subordinate portions nest week.
"It has been kind of light since February," one market source acknowledged. "Definitely the bid on the acquisition side has become extremely competitive from Alt-A buyers. That is also kind of creeping into the sub-prime sector. It's pretty interesting."
Plenty of deals were waiting in the wings at press time. Despite a more challenging bid environment for those Alt-A deals, Nomura Securities was prepping about three Alt-A deals.
In the home equity loan sector, Countrywide Home Loans Inc. was marketing a $1.7 billion deal; and Lehman Brothers hoped to come to market with a $1.5 billion SASCO deal. Out of the U.K., Paragon was prepping a GBP1.5 billion ($2.7 billion) transaction.
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