The U.S. primary ABS market maintained momentum last week pricing close to $10 billion for the third consecutive week. Real estate ABS accounted for roughly one-third of total new issuance. Additionally, as of Thursday's market close, just over $3 billion remained in the pipeline slated for a Friday session pricing.
Countrywide Home Loans Inc. was in the market with a pair of offerings, one backed by Alt-B MBS collateral and the other by subprime MBS. The $535.17 million subprime deal was on target across the credit spectrum. The 3.22-year triple-A rated notes priced within guidance at 20 basis points over one-month Libor, while the longer dated seniors, with a 6.65-year average life, cleared at 31 points over one-month Libor. The 4.85-year mezzanine bonds also priced in-line with guidance to clear at 41 points over Libor. Down in credit, the triple-B minus rated 2.7-year average life subordinates cleared at 190 basis points over Libor.
Countrywide's Alt-B offering priced slightly wide in its senior notes, with the one- and three-year senior classes clearing at 10 and 21 points over Libor, versus guidance initially set at nine and 20 points over Libor, respectively. Spreads tightened down the capital structure, however, with the 3.81-year single-A rated notes pricing on target at 65 basis points over one-month Libor and the 3.79-year subordinates pricing with guidance at 125 points over one-month Libor.
Morgan Stanley tapped the market for $1.24 billion in subprime MBS off of its Morgan Stanley ABS Capital Trust vehicle. The deal priced tight throughout much of the mezzanine portion of the capital structure, with the 4.99-year notes clearing at 39 points over one-month Libor relative to talk in the 40 basis point area over Libor. The 4.91-year notes were similarly inside of expectations at 47 points over Libor, versus talk in the 48 basis points over Libor area. The market also lapped up the 4.85-year split-rated subordinates, which priced at 117 basis points over Libor, relative to expectations of 120 basis points over one-month Libor.
Barclays Capital was in the market with a $350.5 million offering off of it SABR dealer shelf. Senior classes priced outside of guidance, with the one-year triple-A rated notes pricing at 10 basis points over Libor relative to talk set at eight over Libor. The three-year seniors also priced wide at 20 points over Libor versus talk in the 10 basis point area over Libor. Investors were keener on the 6.68-year seniors, which priced at 30 points over Libor, versus 31 basis point over talk. The single-A plus rated M3 class, with a 5.24-year average life, priced at 67 basis points over Libor. Down in credit, the 5.22-year average life triple-B minus notes cleared at 190 points over one-month Libor.
The credit-card sector had a relatively active week to price almost $1.9 billion. American Express was in the market with its first deals of 2005 - a pair of $600 million offerings, both via joint leads Barclays Capital and JPMorgan Securities. The five-year offering was met with healthy investor demand - its triple-A class pricing at three basis points over one-month Libor relative to talk in the three to four basis points over Libor range. The single-A class cleared at 12 basis points over Libor relative to talk set at 14 basis points over Libor, while the subordinates cleared at 33 basis points over Libor versus guidance in the 35 basis point area over Libor.
The 9.98-year offering from American Express priced largely in line with expectations, with the triple-B rated notes clearing at 49 points over one-month Libor, one point inside of guidance at 50 points over Libor.
Also in credit cards, Capital One Financial Corp. tapped the market with a $750 million de-linked offering via Lehman Brothers and JPMorgan. The triple-A rated A1 class priced on target at seven basis points over one-month Libor, versus talk in the six to seven points over Libor area.
A $1.44 billion deal from BMW Financial Services via Credit Suisse First Boston was all the prime auto-loan sector had on display for investors last week, and investors pounced. The triple-A rated A2 class priced at three-basis points under EDSF, within expectations. In what a CSFB source confirmed was yet another record-breaking print in the auto sector, the two-year triple-A rated notes cleared within expectations at four points under swaps. The 3.26-year notes, with a lone rating from Standard & Poor's, was also on target at nine basis points over swaps.
In the equipment sector, The CIT Group Inc. came with an $804 million deal via JPMorgan Securities and Wachovia Securities backed by office equipment. The 1.05-year senior notes priced with guidance at two basis points over EDSF. The 3.10-year triple-A rated class cleared at six points over swaps relative to talk at seven points over swaps.
Pending for Friday's session was a $1.45 billion series 2005-2 WFS Financial auto loan offering via Citigroup Global Markets and Bank of America Securities, and a $230 million MBIA-wrapped offering from DriveTime, led by RBS Greenwich Capital. In mortgage sectors, GMAC Mortgage was shopping a FGIC wrapped series 2005-HE1 HELOC via JPMorgan and Popular Inc. had a $372 million home-equity deal via Friedman Billings Ramsey and RBS Greenwich.
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