Buoyed by solid credit performance, consumer ABS sectors are expected to perform well in 2008, and those asset classes might even see issuance increase by as much as 12% over the volume for 2007, according to early estimates from analysts at Citigroup Global Markets.
Such an accomplishment will come with challenges, Citigroup warned. In an environment where spreads are at historically wide levels in all sectors, some transactions have failed to price, and the subordinate market is all but shut down. Despite all of this, credit card supply should be flat to slightly above volumes for 2007; auto ABS paper could see a 20% increase, and the student loan ABS sector could see business grow by 20%. Commercial ABS and other asset classes could see 10% growth.
Citigroup made its predictions for the consumer ABS market last month, saying that although the housing slump could threaten the expansion of the U.S. economy, fundamentals aside from housing remain strong. While acknowledging that falling house prices could make consumers feel less wealthy and turn them off from spending, consumers are not excessively dependent on the real estate market. Increases in their net worth are derived from strong financial assets. Housing investment represents just 25% of the household balance sheet, said the investment bank.
As Citigroup was giving the ABS market reason for cheer in 2008, JPMorgan Securities racked up a positive achievement of its own: the bank ranked first among lead managers for 2007 by completing $72.8 billion in deals, according to information from the ASR Scorecard database. That volume was enough to give JPMorgan an 11.1% share of the public ABS business done throughout the year.
Citigroup followed in second place, with $68 billion in deals, and a 10.5% share of the market. Banc of America Securities was third, with $65.8 billion in transactions and a 10.1% market share. Rounding out the top five lead managers were Morgan Stanley, with $53.4 billion in transactions, and Wachovia Securities, which managed $46.8 billion in deals.
Merrill Lynch took sixth place, with $40.3 billion in deals and a 6.2% market share; RBS Greenwich Capital placed seventh, with $36 billion and a 5.5% market share, just edging out Lehman Brothers, which also came up with $36 billion in business and placed eighth. Credit Suisse and Deutsche Bank Securities wrapped up the top ten rankings, with $35.3 billion and $32.1 billion in issuance, to place ninth and tenth, respectively.
(c) 2008 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.