Via First Union, CNL Funding last week brought the year's second small business loan-backed securitization, worth approximately $100 million and placed in the 144A market.

The two-part transaction priced at 64 basis points over the one-month Libor on the triple-A-rated A class, and 250 over the one-month Libor on the split-rated Baa1/A-' B-class. Both tranches priced within guidance. Moody's Investors Service and Fitch rated the transaction.

"We got a very good reception, and it priced inside of talk," the banker said.

Although this was the third deal off this platform, it was the first for CNL Commercial Finance, which last September acquired the platform from the Bank of Yorba Linda (BYL), which had done two previous small business securitizations. CNL Commercial Finance is a subsidiary of the CNL Group.

First Union also brought the year's only other small business loan deal to market in March. That two-part deal, called Business Loan Express, was worth $65 million and was also placed in the 144A market.

First Union anticipates bringing at least two more small business deals to market before year-end.

According to Moody's Investors Service, there were eight deals in 2000, nine in 1999.

"I think the second half of the year will be more active," said Kent Becker, analyst at Moody's. "We've got a few deals in the works on the small business loan front, but I think it could be a challenge to get up to the number of deals that were completed in the previous two years."

Volume has dropped off this year partly as a result of industry consolidation.

"Several of the lenders have been acquired by more creditworthy entities, and they may more diverse funding alternatives, and may not need to do securitizations," Becker said.

For example, First International Bancorp had been very active, issuing three or so deals each year, until they were acquired by United Parcel Services.

Similarly, SierraWest, once active in the small business securitization market, was picked up by BancWest toward the end of 1999.

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