Last week proved to be prosperous for the asset-backed market, as players saw close to $7 billion in new issues (8/3/00-8/10/00), proving that market conditions may be returning to its once fruitful state, some market sources say.
"In general, the tone of the market is improving," said one ABS trader.
One analyst added that there was a lot of new supply and a lot of new deals seen in the past week.
"It's been a primary market dream," said the market source.
Moreover, the healthy conditions that were seen last week proved to be "beneficial for the secondary markets."
"There seems to be more money going into spread product throughout the curve," a trader said. "Not only the front end, it actually looks as if there's some money going into the longer end. The general tone is better."
The trader also added that the demand for floating-rate versus fixed-rate is still evident in the market.
"You're still seeing interest in floating-rate paper," he said. "The top tier names continue to trade pretty quickly in terms of buying in and out of dealer inventories. They tend not to stay there too long."
One seasoned market source noted that the nearing Federal Reserve Board meeting has been having an effect on market conditions.
"Spreads have held in quite nicely with the supply," said the source. "I think the interesting point is about all of the supply is that it has been primarily focused in on the three year and under sector. I think given that scenario, it tells you that investors are still cautious about the rate environment. They feel that rates in fact might increase. We have to wait and see what that situation is. We'll probably see issuance remain fairly strong until the meeting hits us."
Deals That Priced
The abundance of issuance that hit the market last week had participants seeing activity from credit cards, manufactured housing and auto-backeds.
"I saw a fair amount of interest in real estate paper," one trader noted, speaking of deals that priced towards the end of the week. "There wasn't a whole lot of selling, although there was one bid list of about $150 million or so of mostly longer average lives, credit card paper."
And coming out of the credit card sector was the $550 million deal issued by Providian Financial Corp. The senior/subordinate floating-rate transaction was said to have been well received, pricing one basis point tighter of talk.
There was also a hefty serving of auto-backed activity.
Worth mentioning was the Mitsubishi Motors Credit of America transaction. The $1.6 billion auto loan deal was co-led by J.P. Morgan Securities and Salomon Smith Barney, and rated by both Moody's Investors Service and Standard & Poor's Rating Agency.
"I think the market is picking up," said one trader. "I think that next week will be fairly active in terms of real estate issuance. It's been slow so far this quarter so you would expect it to pick up rather than do anything else."
At press time, the pipeline had an adequate amount of deals expected to price. Be on the lookout for activity from Advanta Corp. and Dealer Auto Receivables Trust coming out of the credit card and auto sectors, respectively.
"I've heard a couple of names being bantered about," said one source. "This week alone we've had a nice dose of supply. Next week is also looking to be pretty good. One name I heard rumored was Countrywide Credit Industries, which is going to be $1 billion plus home-equity-backed transaction. The market conditions are still favorable for new deals currently."