The pace in the primary market picked up last week, making the tally for June issuance the highest in Europe to date. By Thursday the week-to-date total European new issuance reached more than 5.0 billion ($6.04 billion). An aggressive primary flow means that that secondary trading slowed as dealer inventories balloon under the pressure of fresh supply. Royal Bank of Scotland reported recent deals trading close to par and in some cases at a modest discount.

Karta 2005-1, a 750 million ($970 million) Greek credit card deal for EFG Eurobank, was being marketed last week. Karta is the first Greek deal backed by credit card accounts and offers buyers three note tranches rated triple-A, single-A and triple-B with 5.0-year average lives. The pool included almost 914,000 accounts with a weighted average balance of 1,137 and weighted average-limit of 2,623. A source close to the deal said that underwriters had announced the red herring last Tuesday and the issuer was in the midst of soliciting orders.

CMBS supplies continue to grow. Last week, marketing commenced for the inaugural deal from Goldman Sachs' European CMBS conduit dubbed Fleet Street Finance One, which has on offer GBP659.2 million of exposure to three loans on 156 properties. Split by value the collateral is 51.9% care homes, 37.8% hotels and 14.4% shopping centres. The underlying care homes are operated by Four Seasons Health Care and the hotels by Queens Moat Houses, while Capital and Income Trust Group operates the three shopping centres. Fleet Street includes a GBP450 million Class A tranche with an equivalent 42.7% LTV and a 5.4-year average life.

Commercial First Mortgages began marketing its third CMBS transaction - Business Mortgages Finance 3. A total of GBP250 million of notes are offered and all tranches are on offer in both euro and sterling denominations. Business Mortgages Finance 2 priced in November last year, with Class A notes coming at Libor 29 basis points for a 3.4-year average life, said market sources.

DG Hypo's 734.8 million synthetic CMBS Proscore-VR 2005-1 also began marketing last Monday and at press time guidance had been issued on its five credit-linked tranches rated from triple-A to double-B, structured as 5.3-year notes. The triple-A piece was talked at 25 basis points over Euribor, while the triple-B notes were talked at 100 basis points. The pool includes 3,072 small commercial loans with a 54.4% weighted average LTV - 8.1% had an LTV above 80% of which 2.2% were above a 90% LTV.

Guidance talk was also heard for Dolerite Funding 2, the second granular CMBS transaction for Northern Rock. A total of GBP600 million of notes are offered, including GBP486 million of 2.4-year triple-A rated notes talked at 20 basis point area along with four further 3.9-year tranches rated double-B. The pool included 388 loans with over 2,000 tenants.

Analysts at Dresdner Kleinwort Wasserstein said that CMBS issuance may reach 35 billion to 40 billion this year, and a higher level of understanding of this market should lead to greater liquidity and long term-growth.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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