Last week was the busiest for new issuance since the events of Sept. 11, pricing more $9 billion across all collateral sectors as investors gave the thumbs up for second-tier issuers to tap the market. Trepidation from the buyside was seen when it came to the first third-tier offering. Though the Conseco home-equity deal widened spreads significantly, it failed to completely price a deal as of press time.
The most successful deals of the week, from sector benchmarks AmeriCredit and Chase, saw heavy investor demand that led to increases in size and spread tightening. Subprime auto lender AmeriCredit sold $1.8 billion of auto loan paper through Deutsche Banc and JPMorgan jointly that was increased from an initial $1.5 billion. Chase increased its three-year credit card-backed deal to $1.5 billion from $1.19 billion.
As the first non-prime issuer to tap the auto-loan market, benchmark issuer AmeriCredit had great success with its offering, according to Brad Dansker, vice president in the JPMorgan North American ABS group. "AmeriCredit has been a quarterly issuer for years and as a result has a loyal investor following," he said. Because of this following, they had the demand to increase the deal by $300 million without giving up any spread.
The series 2001-C deal, guaranteed by a FSA wrap, came in flat to four-month Libor for the $234 million money market A1 class, 23 basis points over one-month Libor for the $610 million 0.95-year A2 and 30 basis points over one-month Libor for the $481 million two-year A3 notes. Some softness was seen out on the curve, with the $475 million 3.41-year A4 class, initially talked at 37 to 40 basis points over swaps, priced to yield 43 basis points over.
Reflecting slightly better credit but a less recognizable name $401 million of "mid-prime" auto paper from Onyx Acceptance priced through Salomon Smith Barney, at levels in line to one basis point rich to AmeriCredit. Second-tier issuer Household priced $820 million of subprime auto paper through Deutsche Banc late in the week, which came in two to eight basis points wide to Onyx.
Early in the week, Fleet priced an $800 million three-year fixed-rate deal through CSFB and Morgan Stanley. The fixed-rate 2001-C deal priced $684 million of senior notes to yield 14 basispoints over comparable swaps.
Mortgage-related activity picked up significantly, with RMBS and home equity-backed paper accounting for $2.5 billion of the total on six deals. Sector benchmark GMAC-RFC had little trouble in completing its previously scheduled offering of "scratch and dent" RMBS, from the issuer's RAMP issuance vehicle. Fellow GMAC unit GMAC Mortgage priced two deals last week, $258 million of a home equity line of credit (HELOC) and a straight home-equity offering for a total of $611million.
Low documentation lender Impac Mortgage priced $400 million of on-balance-sheet RMBS-backed notes through Countrywide Securities after widening a touch from initial guidance. Sequoia Mortgage, a unit of REIT Redwood Trust sold a $510 million securitization of home-equity loans originated originally by Merrill Lynch and partially serviced by Cendant Corp.
Running into difficulty, Conseco failed to completely sell all the bonds of a $539 million home-equity deal in the market via Lehman Brothers. Despite being introduced late the previous week, only the triple-A rated senior tranches of the 2001-D offering priced, some classes up to 18 basis points wide to initial guidance. While the short-term floater came in only a touch wide to initial talk, the two-year A2 and three-year A3 classes each widened to yield 88 basis points over comparable swaps versus initial talk in the 70 basis point area.
Following up its sale of $3 billion of Freddie Mac conforming home-equity deal, Option One Mortgage brought a $244 million single-tranche net-interest margin deal, with a 1.1-year average life, that came right in line with guidance of 30 basis points over one-month Libor. As was the case with the PSPC T-36 deal, it was led jointly by Banc of America Securities and Greenwich Capital Markets.
Truck manufacturer Navistar International brought a long-scheduled prime truck loan-backed deal through Banc of America. The 2001-B deal widened a touch from initial indications, but sold all of the bonds offered, sources noted.
Initially scheduled to price the day of the Sept. 11 attacks, Reliant Energy completed its $749 million stranded cost securitization in the market through Merrill Lynch at levels up to five basis points wide to pre-Sept. 11 talk for the 2.7-year, 5.3-year and 7.2-year tranches. The 10.3-year class, which had already concerned investors due to its amortization schedule, widened 10 basis points from initial guidance.
