Securitization professionals last week had a lot to celebrate - and bemoan. Just when it looked like the subprime MBS market was emerging from its early-year volatility, the sector destabilized again, triggering an investor rush to sell off CDO and MBS holdings in two Bear Stearns hedge funds (see next page). The overall market, however, generally escaped the volatility that began on midweek in CDOs and which is probably still going on.

Despite widespread news of the hedge fund destabilizations, the ABS market saw a healthy stream of deals with diverse collateral. A $970 million First Franklin Mortgage Loan Trust, led by Merrill Lynch, sold its one-year triple-A-rated tranche at six basis points over the one-month Libor, largely in line with where spreads generally stood about 14 months ago. The $290 million Soundview Home Equity Loan Trust came within a touch of that level, with a similar security that priced at seven basis points over. Coming back for an encore, a separate Soundview transaction amounting to $313 million was being talked at six basis points for its triple-A, one-year piece.

The Ace Securities Corp. 2007-HE5 transaction, however, had less success, as its one-year, triple-A piece came in at 11 basis points over. Deutsche Bank Securities managed the transaction, which was backed by a mix of fixed, adjustable, first- and second-lien mortgages and closed-end mortgages. The two-year piece on that deal came in at 15 basis points over the one-month Libor.

Several other HEL deals were also in the offing last week, including a $950 million transaction from Countrywide Securities. Pricing talk on the one-year, triple-A rated piece was six basis points over the one-month Libor. The tranches with a two-year maturity were being talked at 13 basis points over the one-month Libor.

As Sallie Mae stayed on the sidelines of the securitization market, smaller SLABS issuers continued to capitalize on increased attention from investors. The $1.3 billion SLC Student Loan Trust, which came to market via Citigroup Global Markets, was backed by FFELP consolidation loans. The transaction ran off with a pricing of two basis points under the three-month Libor on the 1.25-year tranche; the three-year piece priced flat to the same benchmark, and the five-year piece came in at just three basis points over. Barclays Capital, Credit Suisse and Merrill Lynch all participated as co-managers on the deal, which gave a little something to yield-hungry investors. Those who decided to commit to the 10.57-year, double-A rated piece will be paid 20 basis points over the benchmark for their time.

By press time, the Chase Education Loan Trust was shaping up to be a star student with its inaugural deal, also secured by FFELP consolidation loans. With JPMorgan Securities acting as lead manager, pricing talk on the transaction put the three-year, triple-A rated piece at three-month Libor minus one basis point. Barclays Capital, Credit Suisse and Lehman Brothers also participated on that deal.

The insurance-premium finance sector also weighed in, with a $500 million transaction from AIG led by ABN AMRO. The bank also acted as lead manager on one of a couple of clean auto deals for the week that were richly priced against their fixed and floating benchmarks. The $1.9 billion Ford Credit Auto Owner Trust saw its 0.29-year, short-term tranche price at Libor minus two basis points. It threw in a triple-B, 3.88-year tranche that will pay investors 42 basis points over swaps.

Another auto transaction, the $645 million Wachovia Auto Owner Trust priced a 0.39-year, triple-A rated piece at five basis points under Libor, and a 1.10-year piece at EDSF minus two basis points.

Last week also saw a couple of credit card transactions, one of which was backed by U.K. receivables. The Turquoise Funding I Ltd., for which HSBC Securities acted as lead manager, priced its triple-A, three-year notes at three basis points over the one-month Libor, and saw its swaps tranche come in at 14 basis points over. Co-managers were Banc of America Securities and JPMorgan.

(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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