The primary ABS issuance market did not see a ton of issuance last week: An auto ABS and a couple of modestly sized credit card deals were the highlights.
Some market sources acknowledged a slight pickup in activity toward the end of the first quarter, whether it involved term deals or more short-term transactions like asset-backed commercial paper.
The Fifth Third Auto Trust 2008-1 priced an $814 million deal secured by auto loans. Barclays Capital acted as the lead manager on that deal.
In terms of pricing, the short-term portion went for seven basis points over the interpolated Libor. That was the only tranche that priced tighter than at triple-digit levels. The triple-A tranche with a duration of slightly more than one year, priced at EDSF plus 125 basis points, while the two-year tranche, which also garnered triple-A ratings, came in at swaps plus 155 basis points.
The credit card ABS sector also came up with a deal last week. The Chase Issuance Trust Class A 2008-4 floated $830 million in ABS debt. JPMorgan Securities acted as lead manager on that transaction, although full pricing information was not available.
On the ABCP side, the perspective on activity varied somewhat.
"We're seeing a reasonable flow of quarter-end deals, mostly multiseller," said one source from the ABCP sector.
Unfortunately, the ABCP sector also experienced a pullback, according to data from the Federal Reserve. By March 26, there was $777 billion in asset-backed commercial paper outstanding, down from the $780.3 billion outstanding a week before, and the $791 billion near the end of February.
In a move that has become common in the ABCP market, another program wound down. The Transamerica Secured Liquidity Notes Corp., a fully supported, single-seller program administered by the Occidental Life Insurance Co., repaid all of its outstanding paper and stopped issuing new ABCP.
Otherwise, traders who specialize in secondary paper said they saw plenty of activity, as inquiries continued to pour in from distressed-asset funds that are actively raising money and trying to get off the ground. Aside from fielding calls from distressed-asset funds, there is not a whole lot going on, said one trader.
"With issuers in the ABS market looking for more stability before entering the market and the secondary ABS market looking to the new issue market for price guidance, the market finds itself in a bit of a holding pattern with no consistent flows," according to a report from Merrill Lynch.
The student loan ABS market might get a boost in underlying loan volume, especially if Congress acts on several proposals put forward by the National Association of Student Financial Aid Administrators last week. In a letter to House and Senate Committees, the trade association suggested loosening requirements for students to get lender of last resort financing for college expenses. Currently, the LLR rules require that students prove they were turned down by up to two lenders before applying for LLR financing.
"NASFAA supports allowing institutions to certify that there is a loan access problem at the institution, so borrowers will not bear this additional burden," Philip R. Day Jr., president of the NASFAA, wrote in the letter to Congress.
The group proposed that Congress take additional action, such as shoring up access to the Direct Loan program and restoring liquidity to FFELP loan providers.
"The LLR program could be well received in the ABS market, since these loans carry a 100% guarantee versus 97% for newly originated loans," Merrill Lynch wrote.
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