As players return to work, getting back into the swing of things, the asset-backed market seems to be awakening.
Last week brought three deals into the ABS public market for a total of $2.1 billion in issuance. Judging from the pipeline, it is expected that the market will pick up.
"The pipeline is starting to build," said one analyst. "Hopefully the second half of the year becomes more active. Surprisingly, even this week, there's been some stuff that's been done. So I think that's good news on that front."
However, one trader didn't see activity in his market forecast.
"Next week sounds like it is going to be pretty quiet," he said. "I haven't heard a lot. I don't there's much in the strains right now. Nothing in particular is being worked - I would think that next week is going to be a relatively light week."
As for market technicals, fixed-rate product remains in favor, said the trader. Last week dealt the market a hefty hand in secondary activity on the fixed-rate side, while floating-rates held in relatively well.
"The deals we've seen this week - they've been mostly floating-rate deals," he said. "So, technicals in the fixed-rate stuff remain pretty good. Lack of supply creates a set-up for accounts to go searching through dealers inventories selectively buying from dealers."
Deals that Priced
Of considerable significance last week was the $150 million floating-rate student loan transaction issued by South Carolina Student Loan Corp., which included a $40 million triple A-rated tranche benchmarked off the 90-day commercial paper index (see CP story page 2).
"This could be a trend," said one trader. "If I'm not mistaken, a lot of student loan issuers get their funding on a CP basis, so its probably more efficient for them to issue that way."
The dealer floorplan transaction issued by Distribution Financial Services was responsible for the bulk of the volume that hit the market last week. Each class of the $1.23 billion deal featured a soft-bullet maturity.
In the private market, Commercial Net Leasing was prepping a $283 million restaurant lease-backed deal structured in accordance with 144A. There was also talk of a New York City Tax Liens transaction. The $157 million dollar deal is expected to be rated by Moody's Investors Service, Standard & Poor's Rating Service and Fitch.
Other Cards Fill in For Citibank
One asset-backed analyst pointed out that despite the seeming disappearance of Citibank from the credit card sector, card issuance is nearly at par with last years year-to-date numbers.
Last year, Citibank was the No. 2 credit card issuer, accounting for nearly $5 billion of issuance. This year, Citibank's absence has left other participants such as MBNA (last year's No. 1 issuer), Discover and American Express to pick up the slack.
MBNA brought roughly $8 billion to market last year. At the halfway mark, MBNA is already showing more than $6 billion in deals this year. Discover, with $5.5 billion in proceeds YTD, has already surpassed its $3.8 billion for 1999.
"Credit-card issuance for the year 2000 is off so-far," said the analyst. "Year-to-date issuance is about $20.9 billion, last year about this time it was about $22.8 billion. More people would like to see more credit card issuance."