Nearly two years after re-entering the U.S. ABS market, UBS will look to expand its business throughout 2004, moving into the auto loan and credit card sectors of the market. Known primarily for its mortgage-related and CDO presence, UBS is making inroads into both the prime and non-prime sectors of the consumer sectors, activity it expects will make the underwriter more visible in the second half of the year.

The expanded operations are part of a broad plan to offer complementary services globally, said Shahid Quraishi, managing director and U.S. group head. The bank is further along in its plans to underwrite credit card ABS, with auto co-manager mandates slated for the second half of the year, Quraishi added.

Bob Feldman, hired away from Morgan Stanley earlier this month as a director in the origination group, will head up the prime aspects of both the auto loan and credit card sectors. Reggie De Villiers, who came to UBS along with Quraishi in April 2002, is heading the non-prime auto loan and credit card operations, in addition to his responsibilities in time-share ABS. Both report to Tamer El Rayess.

UBS is looking for a research analyst to focus primarily on consumer assets, reporting to Tom Zimmerman.

UBS is making inroads with many of the common auto issuers in the prime and non-prime market segments, both captive finance issuers and independent lenders. The first of these to include UBS in its selling group will likely be AmeriCredit Finance, with prime foreign captives likely to follow. The auto operations won't likely gain critical mass until the second half of the year.

In credit cards, UBS completed a $150 million Fingerhut series 2003-1 transaction late last year that represents the latest innovation in funding for the subprime sector. The securitization involved liquidating accounts originated from the Fingerhut Master Trust, acquired and serviced by CompuCredit Corp.

"You can expect to see more of those liquidating portfolio-types of deals ahead," added Quraishi.

In addition to the push into auto loans and credit cards, UBS will maintain a focus on esoteric assets, such as aircraft leases, high LTV and manufactured housing loans. Additionally, to leverage its position as a leading commercial and investment bank in Europe, expect to see UBS as lead manager on foreign MBS going forward.

UBS' traditional strength, mortgage ABS, should continue with force. UBS has divided its strategy to three focus areas - third-party underwriting, and bulk and mini-bulk portfolio acquisitions. Bulk portfolio acquisitions are defined as purchases greater than $150 million, while mini-bulk acquisitions total anywhere from $15 million to $150 million.

Whole loan purchases are an integral part of the UBS strategy, as it is viewed as an alternative to conduit lending. "Principal finance activity lets us act as a liquidity provider for mortgage lenders," said Quraishi. This year, he added, UBS aims to be a top-five player in mortgage-related ABS, with a goal of leading $17 billion in home equity ABS.

Already this year, UBS has led a transaction for AmeriQuest Mortgage's Argent wholesale origination platform and a global MBS for Halifax plc's Permanent Financing vehicle.

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