Home equity deals dominated a sluggish U.S. primary market that priced $10.4 billion last week. Three credit card deals and one auto deal also found their way to the fore while other sectors, such as student loans, equipment and auto leases, and rate reduction bonds sat on the bench.
The largest deal of the week was a $1.65 billion floating-rate credit card offering from Chase Manhattan Bank The three-year deal was upsized from $1 billion and priced on top of guidance at one basis point over one-month Libor. Chase also priced a seven-year credit card floater that was upsized to $600 million from $500 million and priced on top guidance at seven basis points over one-month Libor.
"Both deals met with very good demand," and the deals were upsized to compensate for that, said a source familiar with the transactions, adding that the upsizing did not affect the pricing of either deal.
The only other entrant into the credit card sector was Capital One Financial with a $500 million three-year fixed-rate deal led by Citigroup Global Markets and Deutsche Bank Securities that priced on top of guidance at two basis points under swaps.
Investors hungry for floating-rate home equity deals had plenty to chose from last week, as the market was packed with investment bank shelf deals, as well as foreign RMBS. Two Australian RMBS deals priced in the U.S. market, one a $1.3 billion deal from the Commonwealth Bank of Australia led by Citigroup. The 2.75-year deal priced at four basis points over three-month Libor and had a $12 million B-tranche that was retained at 55 basis points over three-month Libor.
The other foreign RMBS was a $1 billion offering from Interstar Securities led by Deutsche Bank Securities and JPMorgan. The three-year tranche of the deal priced 12 basis points over three-month Libor, one wide of guidance.
Morgan Stanley priced a $950 million floating-rate home-equity deal from its Morgan Stanley ABS Capital Trust. The one-year tranche priced on top of guidance at nine basis points over one-month Libor, while the five-year M1 tranche priced at 41 basis points over one-month Libor, also on top of guidance.
CDC IXIS was in the market early in the week with an $850 million home-equity floater through its Real Estate Capital Trust led by Morgan Stanley. The two-year tranche of the deal priced at 15 points over one-month Libor, one basis point wide of guidance, while the three-and-a-half year tranche priced on top of guidance at 22 basis points over Libor.
Goldman Sachs tapped the market with a $565 million home-equity floater from its GSAMP Trust. The one-year tranche priced at nine basis points over one-month Libor, the three-year at 20 basis points over, and the 6.58-year class priced at 34 basis points over one-month Libor, two points wide of guidance.
GMAC-RFC tapped the market with a $510 million floating-rate home equity deal led by Credit Suisse First Boston and RBS Greenwich Capital. The one-year tranche priced 10 basis points over one-month Libor and the two-year at 16 basis points over one-month Libor, wide of talk in the 14 to 15 basis point range. Of note, the deal was rated by Moody's Investors Service and Fitch Ratings but not Standard & Poor's.
Three dealer shelves brought home equity floaters as well, as Bear Stearns priced a $292 million deal with the two-year tranche priced at 15 basis points over one-month Libor, on top of guidance and the CDC IXIS deal. Bear Stearns priced a second floating-rate home equity deal out of its EMC Mortgage Loan Trust, totaling $152 million, which had yet to price as of press time, but the 1.49-year tranche was being talked in the 25 basis point area over one-month Libor, while the 6.81-year was talked in the 45 basis point area over one-month Libor.
Wachovia Bank brought a $262.4 million deal out of the Wachovia Loan Trust, its first-ever pricing from the new vehicle. The 2.54-year tranche priced one basis point wide of guidance at 36 basis points over one-month Libor. The five-year tranche priced well wide of guidance in the high 50 basis point area to price at 65 basis points over one-month Libor. The 4.87-year tranche also priced nearly ten basis points wide of guidance in the low 60 basis point area over Libor to reach 70 basis points over. Fitch Ratings rated both of those tranches double-A, while Moody's rated the 4.97-year tranche double-A- and the 4.87 year tranche double-A.
Merrill Lynch was also in the market with a $268 million deal as well from its SURF Trust that had yet to price as of press time.
The auto sector was relatively quiet last week as issuers continued to let the dust settle in the tumultuous auto industry. First Investors Financial Services Group braved the elements to price a private $175 million floating-rate auto deal from its First Investors Auto Owner Trust 2005-A. The money-market 2a7 tranche priced at eight basis points over EDSF, while the 2.13-year A2 tranche priced at 24 basis points over swaps. The Wachovia-led deal, the issuer's first since 2003, is backed by a full MBIA wrap.
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