Last week, the U.S. ABS primary market continued at a modest pace with $6.2 billion of supply making the rounds, half in mortgage-related sectors. A couple of notable events occurred as American Honda Finance and MBNA Bank America priced transactions that challenged the market to move tighter in the already richly-bid credit card and auto loan sectors. Also, a pair of agency-wrapped classes of home equity offerings moved past previous thresholds.
Honda brought its third - and likely final - ABS transaction of the year, a $1 billion fixed-rate offering via Banc of America Securities and Deutsche Bank Securities. Demand was strongest out on the curve, due to Honda's record as the best-performing collateral in the ABS market going two years and out. While demand was strong at the front end, each class was oversubscribed, the three-year senior class was three-times oversold despite the meager return of two basis points over comparable swaps and an all-in yield of 3.638%%.