The new issue ABS market had another sub par week, eking out just $8.9 billion in new supply, of which $6.3 billion had priced at press time. For the second week in a row, the auto sector came out on top with $3.1 billion, more than double the $1.4 billion issued out the mortgage ABS sector.
The recent dearth of supply has caught the market off guard, said Barclays Capital researcher Jeff Salmon. "Aside from bellwether transactions from Capital One Financial and GMAC Swift, overall supply has been less than people had expected for this time of year," Salmon said.
The disappointing numbers may be due in large part to the flurry of activity witnessed during the first quarter as issuers rushed to take advantage of the low-rate environment, Salmon said. "There were a lot of issuers who were opportunistic and they went ahead and issued if they could."
Seasonal factors could also play a role as the market heads into the sluggish summer months, he added.
Two deals from GMAC Swift and Capital One Auto Finance Trust accounted for last week's auto volume. GMAC's $2.12 billion wholesale dealer floorplan series 2004-A was led by Citigroup Global Markets and Credit Suisse First Boston. The three-year senior class priced at five basis points over one-month Libor, while the single-A rated B class priced at 25 basis points over Libor, five points wider than guidance.
Cap One's first subprime auto ABS of the year, $1.3 billion of series 2004-A paper, fully wrapped by Ambac, priced via CSFB and Wachovia Securities. One-year A2 notes priced to yield nine basis points over EDSF, with two- and three-year A3 and A4 paper clearing at 11 basis points over swaps and 10 basis points over one-month Libor, respectively.
In the real estate sector, First Franklin Mortgage Loan Trust priced $1.2 billion in mortgage backed ABS through RBS Greenwich Capital. First Franklin's 2.4-year A1 floater priced at 28.5 basis points over Libor, versus initial talk in the 28 basis point area over Libor.
Lehman ABS Corp. hit the market with a $260 million Ambac-wrapped HELOC offering led by Lehman Brothers, which priced at 22 basis points over one-month Libor for the 2.5-year single-tranche offering, at the wide end of price guidance. The 2.8-year senior A3 class, meanwhile, priced at 26 basis points over Libor. The triple-B minus bonds priced with a coupon of 475 basis points over Libor, out from the price talk in the 425 to 450 basis point range.
GMAC-RFC was hoping to wrap up the $1.17 billion subprime MBS that it was shopping via joint leads Citigroup and JPMorgan Securities. The fifth transaction from the RASC KS trust consisted of both fixed- and floating-rate classes, with pricing expected for last Friday.
Late in the week a pair of transactions from infrequent issuers were circulating, but had yet to price as of press time. Carrington Mortgage, a first-time issuer located in Florida, was marketing a $326 million home equity ABS via Merrill Lynch.
Also, Finance America and HomeStar Mortgage were each in with just the second ever home equity ABS from their respective trusts. Finance America had a $903 million floating-rate series 2004-1 senior/subordinated offering through Lehman Brothers. HomeStar, meanwhile, had its second transaction of the year, totaling $400 million via Citigroup, which also led its inaugural ABS in March.
The lone credit card offering of the week was a $500 million deal from World Financial Network's WFN Credit Card Trust led jointly by Barclays Capital and Banc One Capital Markets. The senior/subordinated series 2004-A priced at the tight end of guidance.
The student loan sector was comprised of a $1.3 billion offering from College Loan Corp. backed by consolidation loans and led by Citigroup, Goldman Sachs and UBS.
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