It seemed like back to school time last week in the securitization sector, as no less than three student loan ABS issuers came to market with deals totaling about $3.5 billion. That accounted for almost one third of the total $15 billion expected from issuers last week.
Goldman Sachs acted as lead manager on the $2.2 billion National Collegiate Student Loan Trust transaction; Nelnet Student Loan Trust came to market via Banc of America Securities, and the Keycorp Student Loan Trust came to market via Deutsche Bank. By press time, Nelnet Inc. was poised achieved particularly good pricing on its one-year, triple-A rated piece, with spreads talked at negative three basis points on the three-month Libor. The 10.9-year tranche gave up the most, pricing at 20 basis points over the benchmark.
First Franklin Mortgage Loan ABS came to market via Lehman Brothers. The $681 million transaction had a 0.80-year tranche that priced at 18 basis points over the one-month Libor, and a 4.06-year piece that came in at 275 basis points over. Lehman Brothers also acted as lead manager on the Structured Asset Securitization Corp., a $779 million home equity loan transaction. Among tranches rated AAA', the 0.81-year piece priced at five basis points over the one-month Libor. The two-year piece, also rated AAA' priced at 13 basis points over. The slightly wider HEL-related spreads did not go unnoticed, yet they raised few eyebrows among market professionals.
"This is typical fourth-quarter weakness [that] we are seeing in spreads," one market player said. He added that at this time of year: "demand softens for risk of credits."
Bear Stearns managed its own second-lien deal, the $339 million Bear Stearns Mortgage Funding Trust. On that transaction, the triple-A, 1.29-year piece came in at 15 basis points over the one-month Libor, while investors on the 3.48-year end of the deal saw their pieces of the deal price at 400 basis points over the same benchmark.
HSI Asset Securitization Corp. came to market with a $1.5 billion transaction, with HSBC Securities acting as lead manager. That deal saw its triple-A-rated two-year tranche price at 11 basis points over the one-month Libor, while the 9.6-year tranche, carrying BBB' and similar ratings, came in at 300 basis points over the benchmark.
A card transaction was included in last week's flurry of deals, as Advanta Business Card Master Trust came to market with a $340 million deal. Merrill Lynch acted as lead manager on that transaction. The two-tranche deal offered investors two basis points over Libor for the triple-A rated bonds, and 48 basis points over for the benchmark for the triple-B bonds.
Several issuers were circulating their deals in the market, part of the rush to complete deals in December's closing weeks. Residential Funding Corp. began marketing a $340 million RAAC 2006-SP4 transaction, while Asset-Backed Funding Certificates 2006-HE1 was hoping to place $1.4 billion of home equity debt. Indymac Mortgage continued marketing its $891 million INABS 2006-E home equity loan deal.
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