Germany announced plans to issue a €6 billion ($7.9 billion) securitization of pension fund contributions by the former Deutsche Bundepost, now Deutsche Telekom, Deutsche Post and Deutsche Postbank. The deal was expected to roadshow this week via joint lead managers Deutsche Bank Securities and Morgan Stanley.

The German postal pensions securitization is expected to offer three triple-A rated tranches with five-, 10 and 15-year bullet maturities for Bundes-Pensions-Service. Proceeds will be deposited into the pension scheme, in place of monies due from the government and principal will be repaid from future contributions made. The government took over a third of the Deutsche Post's and Deutsche Telekom's pension liabilities when they were privatized. Deutsche Post and Deutsche Telekom cover the remaining liabilities through yearly contributions - the future cashflows securitized in the transaction. Germany has reported 3% GDP growth for the last three years and industry sources said the government is hoping the European Commission will allow the transaction to count towards reducing some of its debt.

The European calendar continues filling ahead of the Barcelona conference later this month and industry sources say it's uncertain how this will affect spread movement over the next few weeks. "Our dealers report that the recent firming of spreads has continued although there continues to be a distinction between senior versus mezzanine paper, the former remaining wider," reported analysts at Commerzbank. "As can be seen from the closed deal list during the period, issuance continued to be heavy with a strong pipeline in the short term. Given the level of expected new issuance, it remains to be seen how spreads will perform looking forward."

Analysts at the Royal Bank of Scotland added that many of the recent deals have been trading tighter on the break and more dealers are expecting spreads to tighten in line with recently improved corporate levels. "However, 17 billion of primary deals are currently marketing, and the fact that dealers remain long inventory, suggest the short-term upside will be limited," said analysts.

Price talk was circulated for Permanent Financing 8's euro- and sterling-denominated notes. Permanent 8 offers 56% dollar denominated notes, retracing away from euro-denomination trend in U.K. master trusts, as euros accounted for only 16% of this deal's capital structure. The 5.3-year euro denominated notes were talked in the 14 basis point area over Euribor and the 6.5-year sterling class A notes were talked in the 15 to 16 basis point range over Euribor. According to industry sources, triple-A Permanent paper at the five-year level is currently trading at 13 to 13.5 basis points over the respective indexes. "There is a good tone to the market but it's most likely this will shift," said one trader. "[The] pipeline is strong but there is a bit of anticipation of a weaker pipeline ahead in July and August."

RMBS flows poured in from the Iberian Peninsula. Dealers began marketing a 1.5 billion (US$1.83 billion) Portuguese RMBS from Banco Comercial Portugues dubbed Magellan Mortgages 3. The capital structure included 1.4 billion of triple-A rated paper. The pool is backed by 25,465 loans with a 74% weighted average LTV and 15.8 months of seasoning and no subsidized mortgages included. From Spain a 700 million deal for Barclays Bank and AyT Hipotecario VI was also marketing last week. The deal will include both fast and slow pay triple-A pieces, offered with 1.1-year and 7.6-year average lives; a 10.2-year average life split rated (Aa3/A/AA-) tranche is also on offer. The provisional pool had a 58.3% weighted average LTV and 12 months of seasoning.

An additional 1 billion Spanish RMBS was on tap for Banco Pastor, with 961 million of 6.2-year A class notes offered. The provisional pool includes 8,352 loans with a 66.9% weighted average LTV and 10 months of seasoning. The leading geographic concentrations include Catalonia at 36.1%, Galicia at 14.5%, and Madrid at 14.1%. Of the pool, 2.83% were in arrears between 30 and 90 days. Jumbo loans (those greater than 400,000) were 4.39% of the pool.

Work is also underway for AyT Hipotecario BBK 1, a €1 billion deal for Bilbao Bizkaia Kutxa. The provisional pool of 9,300 first-lien mortgage loans had a 91.3% LTV, with all the loans above 80%, 71% Basque Country concentration and 24 months of seasoning.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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