Issuance was relatively quiet last week, as the ABS market edged closer to the end of the quarter and the Fourth of July holiday.
Traders attributed the lull to the relatively steady amount of issuance seen during the quarter, which has now strained both bank and investor balance sheets.
Last week's volume was half of the prior week, said Merrill Lynch in a report released Tuesday. While consumer ABS spreads have continued to tighten, they have begun to do so at a slower pace, Merrill analysts said.
"The new issue supply had taken a lot of cash out of the market, which has made it tougher to get deals done," said an ABS trader, who noted that this pattern is typical of end-of-the-quarter behavior.
The ABS market was also unfazed by the June remittance data that came out last Thursday, which, despite continued deterioration, showed a slowing pace of delinquencies, according to reports (see story p. 16). However, this was not enough to inject life into a still gloomy outlook for the subprime mortgage market.
Still, deals did trickle in. Deutsche Bank Securities and RBS Greenwich Capital co-managed Advanta Business Card Master Trust 2008-A3. The $150 million single-tranche transaction priced triple-A paper at 150 basis points over one-month Libor.
Banc of America Commercial Mortgage Trust 2008-1 came to market via Banc of America Securities and Barclays Capital. Triple-A rated two-and-a-half-year paper priced at 115 basis points over swaps while triple-A rated six-year paper priced at 158 basis points over swaps. Citigroup Global Markets acted as co-manager on the transaction.
Also added to the pipeline were several FFELP student loan transactions. This reflects the fact that private student loan volume continues to lag FFELP issuance, Merrill analysts said.
Citigroup Global Markets brought a $120 million deal for Vermont Student Assistance Corp. (VSAC). The VSAC 2008B-1 deal is the first FFELP student loan securitization of the year for
the company.
The deal will also be issued from a new master trust dated June 1, 2008, instead of the 1995 master trust that issued all of VSAC's previous transactions, according to a presale report from Fitch Ratings.
The series 2008 B-1 bonds will be backed by 100% FFELP loans, instead of both FFELP and private student loans, which backed the 1995 master trust, Fitch added.
Meanwhile, Banc of America Securities came to market for
New Mexico Education Assistance Foundation (NMEAF) with a $435 million transaction backed by FFELP Stafford, PLUS and consolidation student loans originally funded by NMEAF's 1995 and 1998 master trusts, according to Fitch. This deal will also issue from a new - and 100% FFELP-backed - master trust dated June 1, 2008, as opposed to all other issuances which either came from a 1995 or 1998 master trust series that contained private student loans as well.
Barclays Capital, Merrill Lynch and UBS Securities are shopping a $1.549 billion student loan securitization for SLM Funding. Co-managers include RBC Capital Markets, JPMorgan Securities and Deutsche Bank. Deutsche also serves as trustee on the deal.
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