Just $1.6 billion in new issuance was seen in the asset-backed market last week, mainly due to market players taking their summer vacations. Also, some market sources are pointing a finger at the players that are choosing to shy away from the markets as the Federal Reserve Board meeting scheduled for August 22 draws near.
"The one thing we do know going into those decisions is that its gets a little quieter than normal because people are waiting to see what's happening," one analyst said.
The analyst said that in spite of the slowdown seen in the market, the general consensus does indeed remain that there will not be another interest-rate hike.
"I don't think any of the economic data has changed peoples' perception," the analyst said. "I think they think that the Fed is pretty much on hold for awhile - unless something were to change - unless there were some indication that the economy is not slowing as much as they thought."
The source added that the idea of a possible rate hike isn't stirring up any worries in the asset-backed community.
"I think people are feeling better about it than they did this last time and it didn't go. But it's always a tendency for investors to back away from the market a couple of weeks going into a Fed meeting."
Although it appears that moderate issuance was seen last week (7/20/00-7/26/00), with just four deals coming to market, one market source feels that it was still an improvement in activity.
"It's better than it was before," the source said. "But there haven't been that many new deals in the past weeks. Last week was pretty good. There were a lot of new deals, new issuance and they were all pretty well absorbed."
This puts the market in a very good technical position, the analyst said.
"Investors are looking for bonds and there is not a whole lot of good stuff out there," he added. "That is part of what is going on. There is not a whole lot of new stuff being issued and there's pretty strong demand right now."
One trader added, "Not a whole lot of activity was seen this week, but we did just get done with a really big bid list. Credit cards and autos traded really aggressively."
In fact, of the deals that came to market last week, credits cards and autos were the largest in size.
Wachovia Bank NA came forth with a $637.5 million credit card-backed transaction, which some market players felt had strong demand. The single-tranche deal had an average life of 4.96 years, and was rated by both Moody's Investors Service and Standard & Poor's Ratings Service.
In the auto sector, Onyx Acceptance Corp. came to market with a $440 million transaction managed by Salomon Smith Barney.
Looking at the pipeline for next week, there isn't much anticipated activity.
"I haven't heard of a lot of deals coming out and it's been pretty quiet," one analyst said. "I think we're getting into the summer period too, when people are going on vacation. So, you've got a combination of a low period in the issuance cycle in the summer months. It's relatively quiet with a pretty good tone to the market."
An ABS trader agreed: "There's no supply out there yet," he said. "It seems like nobody's really busy and selling anything in the secondary markets. It's like people are on vacation and no one really does anything.
