As the European primary market moved closer to its summer slowdown last week, investors were left with limited choices. Options last week were restricted exclusively to U.K. collateral-backed deals, issued in sterling.

Price talk was released for the Punch Taverns Finance B transaction, involving the early redemption of the outstanding floating-rate notes and a covenant package update - 400 of the bottom-end pubs originally included in the deal will be extracted from the Pubmaster portfolio with 663 pubs currently held outside the transaction added. The deal is expected to result in an upgrade of the triple-B rated notes to triple-B plus, according to Fitch Ratings. The GBP250 million ($434 million) A7 class, fixed-rate MBIA-wrapped notes were talked at a spread in the low 50 basis point area over gilts, with the GBP250 million A8 class floaters notes, also wrapped by MBIA, offered at a spread in the mid 20 basis point area over Libor, and the GBP125 million C1 class triple-B piece talked in the 115 basis point area over Libor. Pricing was expected to take place by the end of this week.

Underwriters also issued price guidance for SPS 2005-2, a GBP400 million nonconforming mortgage deal for Southern Pacific Mortgages. SPS offers seven tranches, including GBP143 million of 0.8-year A class notes offered in the 9 to 10 basis point range over Libor. Additionally, there is a pre-placed triple-A rated tranche, with a 4.4-year average life, along with five subordinated tranches offered. The provisional pool had a 77.2% weighted average LTV and two months of seasoning.

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

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