As overall issuance picks up speed, auto ABS accounted for close to $6 billion of deals issued and seen in the pipeline last week (see p.3) and seem to be the hot item for the moment.
This boost in issuance helped to make last week one of the busiest so far this year.
Zooming ahead of the pack, Ford Motor Credit Co. priced the largest of the deals for $2.7 billion, with a whopping $990 million triple-A rated tranche.
Nissan also hit the market with a $960 million multi-tranche transaction, with average lives ranging from 0.30 to 2.90 years.
Other asset-backed notable transactions were Chevy Chase's $270 million deal and deals done by KeyCorp., Residential Funding Corp. and Greenpoint Mortgage Co. Inc.
"It was a heavy week in terms of supply," said one trader. "I think that people are kind of scratching their heads saying, Wow, all of these auto deals coming at once.' All of a sudden all of these auto players decide to do all of these deals at once."
The abundance of deals has caused transactions to price a bit cheaper, one trader noted. The effect has been that spreads have eased out in the secondary market two to three basis points.
One market source said, "You have a lot of investors out there saying, They're talking this deal or they want to price here, but gee, you know Nissan just announced that they want to do a deal and Toyota just announced. It looks like those deals are going to be a little bit cheaper, maybe I'll wait and buy those instead. The investors are in the drivers seat, so to speak."
A Loaded Pipeline
The pipeline for next week has the market lined up and ready for a surge of home-equity deals set to take the market by storm. Historically, home-equity issuances usually pick up around the second and third weeks of June.
"It would certainly be within the scope of expectations to see home-equity issuance start to pick up next week," one source said.
Chase Funding is set to issue a $460 million transaction that will be split into two parts. The transaction, expected to be rated by Moody's Investors Service and Fitch IBCA, will have nine tranches with the IA-1 tranche talked at 10-11 basis points over the one-month Libor.
Out of the equipment lease sector, Great America Leasing Corp. issued its first public securitization backed by its $220 million small-ticket equipment lease portfolio via lead manager First Union Capital Market.
Though new to the public asset-backed market, Great America privately placed two monoline-wrapped deals in the mid-90s for just over $120 million combined.
A source with the company said that Great America does plan to be a frequent issuer going forward.
"We're very optimistic that there is a solid place for us within the sector ... we're going to continue to experience solid growth overall," said the source. "We're confident that our business strategies are well-aligned to meet the challenges that are coming in the economy in the future. We're thinking that we're well prepared to take advantage. If the economy were to go down, we would be in solid shape; if the economy is to be strong and prosperous we're confident that we're well positioned to take advantage of that as well."