Though not as common as they were in past years, at least three new single-seller asset-backed commercial paper conduits have launched in the last few weeks.
For cash and balance-sheet management, GMAC Mortgage Corp. launched an authorized $2 billion ABCP conduit, called Witmer Funding, to warehouse its mortgages pending sale or term securitization. The conduit will issue 180-day secured-liquidity notes, which are extendible under certain conditions, according to a release by Moody's Investors Service.
GMAC is seller and servicer of the loans, and administrator of the conduit. Banc One Capital Markets and Banc of America Securities are providing liquidity support.
Like other corporations who have boosted securitization, GMAC's ABCP conduit follows a downgrade on the corporate side. In this case, GMAC's corporate CP rating was recently lowered to A-2' by Standard & Poor's and F2' by Fitch, though Moody's still has GMAC at its highest short-term rating (P1).
While GMAC's use of the single-seller structure is not surprising, it is generally viewed as less economically feasible for smaller issuers, who might find it cheaper to sell into established bank managed multiseller conduit.
Still, as players predicted during the summer months (see ASR 9/3/01), this year will represent the first uptick in newly launched single-seller deals since 1998. Two smaller conduits have launched in the past few weeks, one from Iowa Student Loan Liquidity Corp. (ISLLC) and one from Genetech Inc.
ISLLC has structured a $100 million program with a $102 million liquidity facility provided by Lloyds Bank, whose commitment is guaranteed by Ambac Assurance Corp.
ISLLC will use the proceeds to fund and warehouse its student loan originations. While this is the organization's first ABCP conduit, ISLLC brought a $145 million securitization to term in February 2000, via UBS Warburg.
Meanwhile, Genetech's $480 single-seller ABCP program is a synthetic lease-backed deal, where the proceeds are used to finance real estate and operations-related costs associated with certain properties in California that Genetech occupies. Through this transaction, Genetech will refinance an existing synthetic lease arrangement associated with a manufacturing facility, according the Moody's release.
A syndicate of banks, arranged by JPMorgan, is providing a liquidity backstop facility.
Outstandings notch up
Outstandings in the asset-backed commercial paper grew a modest $6.6 billion in October, compared to $22.1 billion in September, according to the Federal Reserve.
However, ABCP now accounts for approximately 49.2% of the entire commercial paper market, compared to roughly 38% last year at this time. Without the ABCP sector, the overall CP market increased just $200 million in October.
ABCP outstandings have increased approximately $100 billion since last October, while unsecured CP outstandings have contracted approximately $150 billion in the same time period, with October marking the fifth consecutive month of year-over-year negative growth.