April continued its quiet tone last week with little pricing on the primary front. Deal pricings have, thus far, totaled 11 billion ($15 billion) this month, but the deal schedule is looking optimistic, and it is likely that the pace will pick up before the month's end. Sources at the Royal Bank of Scotland said they expect 2007's April new-issue supply to beat the record 31.8 billion set in April 2005 but did not anticipate any supply-driven widening as a result.
The week saw only the $1.7 billion aircraft lease deal begin showcasing for AerCap Holdings. The single, publicly offered tranche is wrapped by MBIA. The deal is backed by 70, mostly narrow-body aircraft leased to a variety of European, North American and Asian airlines.
But the lack of new issues has led to more substantial secondary flows in generic ABS/RMBS, with U.K. and Dutch prime mortgages seen to be better bid in the past week. Dresdner Kleinwort traders said they expected technicals in the vanilla market to remain favorable in the near-term, given the light pipeline.
According to sources from RBS, a bid list of 440 million mixed, 2005/2006-vintage CMBS had priced by the beginning of last week. "Although spread tiering did show up in some of the pricing of the list, it did not amount to much spread difference," they reported.
It's another story for Spanish RMBS trades, where the week began with negative headlines concerning weakness in Spanish real-estate stocks. According to analysts at Morgan Stanley, the decline in Spanish stocks is believed to have been led by Astroc Mediterraneo, a real estate developer, following an alleged impropriety. Astroc stock has fallen more than 60% in less than a week, and led to an overall fall in Spain's blue-chip IBEX index on Tuesday and marked falls in property and banking stocks. By last Tuesday, Astroc's stock price had fallen to 15.95 pence from 28.07 pence at closing on Friday. The IBEX 35, comprising the 35 most liquid Spanish stocks, fell by 1.97% to 14,692.20 pence. "This has perhaps also helped to focus investors on the extent of downside risks in the Spanish residential property market," Morgan Stanley analysts said.
The news is beginning to spill over into the ABS market, resulting in a number of Spanish RMBS street bids being hit last week, market analysts said.
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