With the quarter having just begun, and with the Fourth of July falling on a Tuesday, not much happened in the asset-backed securities market last week.
At press time, the quarter's only public transaction was an Ameriquest Mortgage Co. $687 million home-equity transaction managed by Salomon Smith Barney.
One trader said, "I would say that unfortunately it has been very slow. I think the fact that it seems to be vacation time for people and the fact that it's the beginning of a new quarter and the second half of the year, it seems that portfolio managers have already evaluated what they are doing for their next six months."
Industry experts are boasting that the second quarter of 2000 was one of the largest asset-backed quarters in history, with $56.3 billion in new issues. According to Thomson Financial Securities Data (TFSD), the month of June alone is accountable for $26.3 billion of the new supply that hit the market last quarter. Autos are responsible for $9.7 billion of those proceeds.
"I think autos had a significant second quarter - they were very busy," said the trader. "I expect them probably not to be as busy because several of them have gotten everything out of the way for the year."
For the month of June, the credit-card sector dealt the asset-backed market a healthy hand of issuance with $5.5 billion in new deals. It is expected that investors' appetite for liquidity will help the credit card sector to remain robust.
The home-equity sector nearly doubled its monthly issuance from May to June. According to TFSD, the HEL sector brought forth 9.6 billion in new issuance. The sector had just $5.7 billion in issuance for the month of May.
Student loan-backed ABS was the fourth most frequently issued asset type in June, with $550 million in proceeds.
Looking ahead, spread conditions are expected to take a turn for the better.
"Right now, the fact that the Fed [Federal Reserve Board] seems to be out of the way, you' have some cash coming back into the spread product which is good for the market obviously," a source noted said.
It is expected that issuance will definitely pick up going forward, although nothing earth shattering will be seen.
"Probably, you'll have a couple of deals done in the next couple of weeks but I think you're talking at least a week to 10 days to start seeing anything significant," the source said.