ABS investors can expect even more home-equity ABS supply from New Century Financial Corp. in the second half of this year. The Irvine, Calif.-based subprime lender announced last week during its second quarter earnings call that it may add as much as $6 billion to its REIT portfolio - a $4 billion increase over previous estimates - in order to meet its $7.33 dividend target next year. New Century added that it has enough cash to complete between $2 billion and $6 billion of securitizations.
The lender defended itself against analysts on the call over its declining net operating margin, which fell to 0.84% in the second quarter from 1.07% in the first quarter and 2.66% a year ago. New Century's Chief Financial Officer Patti Dodge said the declining margin was due in large part to rising Libor rates. The lender has also experienced lower gain-on-sale premiums from whole loan sales. New Century's gain on the sale of mortgage loans fell 36% in 2Q05 to $138.7 million.