The Christmas holidays may be around the corner, but it's evident that the robust pipeline will leave very little time for shopping over the remaining weeks. At press time, issuance had reached E7 billion, with a number of deals pricing and more arriving in the marketplace. Market sources expect the intensity to continue into the New Year.
"Investors who have stayed awake in the recent weeks have been presented with many attractive opportunities," said one source at Dresdner Kleinwort Wasserstein. "What is also increasingly clear is that, of the pipeline that still exits, it will be the case of survival of the fittest' - deals that are priced most flexibly or those that require the least amount of work to get credit approval."
According to figures reported by the Royal Bank of Scotland, November closed with E12.7 billion of new issuance, bringing total year-to-date issuance for 2002 to E123billion. The in-progress' visible pipeline stands at E17.7 billion, excluding CDOs, which are currently taking significant time to market," analysts said.
With investors able to pick and choose, many deals that have come to market have been forced to price at relatively cheap levels; those transactions that don't survive the year-end crush will likely be the first faces to greet the market in 2003. "Given the continued bearish credit sentiment and primary market supply pressures, we think that the weaker market tone evident over the last four weeks will extend into the new year," said analysts at Deutsche Bank.
With last week's pricing of the giant Italian Treasury real-estate securitization SCIP 2, it looks as if 2002 will likely clear - and possibly surpass - the E141 billion recorded in 2001. SCIP 2 is the second deal originated by the Italian Treasury. Pricing for the E6.6 billion issue came within talks. The shorter dated class A notes priced at 20 basis points over Euribor, and the longer-dated class A notes - with 2.41 and 3.41 average maturities - priced at 27 and 32 basis points over Euribor, respectively.
Also pricing last week was the E141 million Provide Residence 2002-2 German RMBS deal. "Like Provide Blue, this deal has suffered from the widening of spreads in the market," said analysts at Dresdner. "Most tranches priced outside other Provide deals from this year." The class A notes priced at 32 basis points over Euribor. Provide Blue 2002-1 priced its class A notes at 29 basis points over.
In the market last week was another auto loan receivable, adding to the growing list already seen earlier this quarter. The E733 million, Ford-originated deal Global Drive, priced its series E notes at 45 basis points over. Portuguese RMBS deal Luistiano Mortgages No.1 Plc priced its class A notes at 28 basis points over Euribor; its class B notes at 48 basis points over; its class C notes at 65 basis points over, and its class D notes at 135 basis points over. It's the third Portuguese RMBS to come to market so far.
On the whole business securitization front, the market saw a tap issuance of Artesian Finance plc. It's the second tap in the series, and funds garnered from the transaction will be used to finance UK-based Mid Kent Water, said sources. The single-tranche deal is wrapped with a Financial Security Assurance-issued guarantee.