First Tennessee Bank is expected to usher in the new year with heightened activity in its securitization program, as the bank considers launching both a public home-equity deal and an auto securitization, and expects to fund a new $1.5 billion asset-backed commercial paper conduit.

In a continuing effort to familiarize itself with the process of asset-backed bond issuance, First Tennessee has completed two on-balance sheet home-equity deals over the last two years, and set up a commercial paper program that it recently began funding.

The plan for 2000, said Terry Rosengarten, senior vice president of treasury at the bank, may call for an asset-backed sale to a third-party investor, something that would be a first for the company.

"What we've done over the last couple of years is get our feet wet in securitization," Rosengarten said. "In '99 we did $378 million, and in '98 we did $711 million, both on-balance sheet-style deals, where we sold the debt to ourselves and spread it out across our affiliates to help us manage our overall balance sheet."

The Memphis-based bank used a real estate investment trust and real estate mortgage investment conduit structure for its pools of second mortgage product. But due to the closed-circle nature of the sales, the bank did not employ underwriters or ratings agencies. Instead, KPMG Peat Marwick advised the company on the deals, Rosengarten said.

"Maybe," was the answer Rosengarten gave to the question of issuing a public HEL deal, as well as an auto securitization for next year.

First Tennessee completed a small direct auto transaction a few years ago, Rosengarten said. And while the bank probably has enough volume to do a direct or indirect auto-loan deal today, the bank still feels "tentative" when it comes to funding through securitization.

"Depending on how you structure, you could hurt your period earnings," Rosengarten said. "It's not something we're going to rush out and do before year-end."

The bank's commercial paper facility is run by Goldman, Sachs & Co., and has a funding ceiling of $1.5 billion. Rosengarten said she expects the bank to have approximately $200 million in outstandings in the program by the end of the quarter.

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