Relatively speaking, there was moderate issuance and activity in last week's asset-backed market. As swaps spreads moved about, two bullet-structured auto-loan backed deals priced, and Sallie Mae birthed another big, big student loan transaction - this one just at $2.5 billion.
Good for Sallie, floating-rate notes remained in strong demand.
Of significance, in last week's market priced what is believed to be the first-ever asset-backed transactions benched on the swap curve - an idea that's been actively discussed ever since the Treasury yield once-and-for-all (in late January? In 1998?) proved to be a poor index for the ABS and other credit-based markets.
Mid-week Tuesday peaked in volatility, as spreads topped out and then, like some kind of enchanted balloon, came in for a tightening on the day. Conditions straightened out somewhat further into the week, making for less volatile conditions.
In secondary trading, spreads moved in a few points on fixed-rate credit-card product, though still out substantially from the floating-rate notes of comparable average lives.
A fixed-rate 1.9-year piece of Discover MT 99-1 was trading at 70 over the bench, in three points on the week, compared to a 2.02-year floating rate piece of Citibank, which was trading at five over the one-month Libor.
Credit Suisse First Boston debuted its first major transaction of the quarter, and, similarly, the first major transaction of the newly placed team headed by Joseph Donovan.
The transaction was structured in seven parts - the first three, A-1 to A-3 notes, were priced on the EDSF. The last four tranches, which included the A-4 to A-5 notes as well as the B-class and C-class notes, were benched on the swap curve.
"It was received extremely well," said John McWilliams, a vice president in banking at CSFB. "The triple-A tranches in general were two to three times oversubscribed."
McWilliams said that benching on the swap makes sense in the current market, as deals have been marketed off the swap curve for some time.
As to whether or not CSFB is showing a full pipeline, McWilliams, who joined from Salomon Smith Barney at about the time Donovan and friends joined from Prudential, said, "We're fully back up to speed."
A spokeswoman for CSFB added, "The fact that Ford committed the deal to the CSFB platform is a good thing."
GMAC priced a similar auto deal earlier in the week, this one also bulleted and partially indexed on the swap curve. Chase Securities and Morgan Stanley Dean Witter co-managed the transaction.
The two deals, which were structured similarly, priced comparable to each other, sources said.
In the pipeline at press time, IndyMac was readying a $270 million home-equity deal, cut down the middle for a $151 million floating-rate group of tranches and a $118.4 fixed-rate group of tranches.
HSBC Bank was also prepping its first-ever collateralized loan obligation, which could be worth as much as $850 million.
Generally, market participants predict more issuance as the quarter moves on, with this third week of April the target for a rush of deals, said one trader.
However, the volatility in the equities continue to weigh on the moral across all the markets, as players are watching "their IRAs fall apart," one trader noted.