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Lackluster month in ABS flow livens up towards the end

Primary issuance in the ABS market chugged along last week and cleared about $9 billion in new deals by press time Thursday, continuing a push to circle transactions before the end of May. Judging by the amount of deals in the market on Thursday, some professionals expected issuance to go as high as $20 billion by the close of business on Friday.

Coming off of Memorial Day weekend, pricing got underway in earnest on Tuesday when Bear Stearns Asset-Backed Securities hit the market with a $323 million deal. Managed by Bear Stearns, the scratch and dent transaction came in at 38 basis points over one-month Libor on the three-year tranche. Also on Tuesday, the Saxon Asset Securitization Trust completed a $984 million home equity deal, via Credit Suisse. Of the $325 million in notes that were marketed broadly to investors, the 3.40 average-life tranche priced at 15 basis points over one-month Libor, while the 4.43-year tranche offered better yields at 190 basis points over the same benchmark.

Although scads of economic data hit the market last week, which some analysts said accounted for muted midweek activity, several large eye-catching transactions boosted the numbers. ARRAN RMBS, a massive prime RMBS deal from the U.K., tapped European and American investors for about GBP2.2 billion ($5.4 billion) in pounds and euros. Of that, three tranches priced in the U.S. totaled $4.6 billion, with Banc of America Securities, JPMorgan Securities and Wachovia Securities acting as co-lead managers. In the U.K., Citigroup Global Markets and HVB managed the deal. The transaction priced at two basis points over one-month Libor on the tranche with the 0.93 average life, while the 3.70-year tranche came in at seven points over three month Libor.

Aside from very large deals, market players speculated that some issuers wanted to get their transactions into the market ahead of pending changes in rating methodology from Standard & Poor's.

Advanta Business Card Master Trust priced a dual series credit card ABS deal, with a $250 million, three-year fixed-rate portion, and a five-year $300 million, floating-rate piece, which was upsized from $250 million. Credit Suisse acted as lead on the smaller transaction of the two, and Merrill Lynch managed the larger deal.

Another large deal from the U.K., a new credit card issuer, came to market. The Turquoise Card Backed Series raised $1 billion in ABS funding with HSBC acting as lead manager. Turquoise comes out of the bank's credit card ABS Master Trust Programme. The 2.98-year tranche came in at one basis point over one-month Libor, while the BBB-rated piece priced at 33 basis points over.

A slew of deals were in the market by Thursday afternoon. Of those that awaited final pricing were HSBC Automotive Trust (USA), a $943 million transaction with price talk that put its 0.95-average life tranche at flat on the EDSF. Also, the Renaissance Home Equity Loan Trust was preparing an $800 million transaction, via RBS Greenwich Capital.

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