The primary ABS market looked relatively lively last week, issuing $15.8 billion in new supply - close to double the combined volume of the preceding two weeks. The steady clip was spurred on by $8.5 billion in global RMBS supply.
Dan Castro, head of ABS research at Merrill Lynch, said investors are still, by and large, on the defensive. "People are worried about rising rates and oil prices and what is going on overseas," Castro said. "It doesn't appear to be the time [for investors] to step up and be a hero."
Autos led U.S. ABS for the third week running, pumping out $2.4 billion in new supply. Ford Credit's Ford Credit Auto Owner Trust hit the market with a $1.3 billion loan-backed offering via Bank of America Securities, Bear Stearns and Lehman Brothers. The one-year triple-A rated A2 notes priced within guidance at four basis points over EDSF, with the two-year A3s pricing at guidance of three basis points over swaps and three-year A4 notes pricing through talk to yield two basis points over swaps.
Harley-Davidson tapped the market for $626 million in senior/sub notes via Merrill Lynch. Onyx Acceptance Auto Trust offered $450 million backed by retail loans/non prime, also led by Merrill Lynch. The 0.37-year money market tranche priced wide at flat to four-month Libor versus guidance in the three points area under Libor - evidence of a broader widening trend in money market tranches.
A $5.7 billion offering from Granite Mortgages via Citigroup Global Markets, Credit Suisse First Boston and Lehman Brothers formed the bulk of the global MBS issuance. Granite's 0.56-year 1A1 floater priced at four basis points over three-month Libor, as opposed to guidance in the two to three basis point range. Also in U.S.-denominated foreign MBS, Paragon Mortgages plc completed its seventh deal, a $1.6 billion floater through Barclays Capital and RBS Greenwich Capital Markets.
The mortgage ABS sector edged out last week's number for a total of $1.5 billion. Morgan Stanley ABS Capital priced $850.1 million via Morgan Stanley. This was joined by a $335.6 million MBIA-wrapped time-share offering from Sierra Receivables Funding Co Trust via Banc of America Securities, Credit Suisse First Boston and RBS Greenwich Capital. The two-year triple-A rated A1 notes priced within guidance at 75 basis points over swaps. At press time, close to $8 million in home equity had yet to price, including a $326.5 million offering from Carrington, $156 million from Bear Stearns BSAB and a $309.2 million offering from ABSHE.
The credit card sector picked up this week with two deals from American Express' Credit Account Master Trust pricing via Citigroup Global Markets and accounting for $1 billion in new supply. Meanwhile, Citibank Credit Card Issuance hit the market with a $175 million offering, also led by Citibank. The single-A rated single-tranche floater priced within guidance at 22 basis points over one-month Libor.
A solitary student loan transaction, $1.5 billion offering from Sallie Mae, covered the student loan sector. Merrill Lynch and Morgan Stanley were joint lead managers on the deal. The 2.5-year rated A1 notes priced within guidance at five basis points over three-month Libor.
In the equipment sector, Caterpillar Financial Asset Trust priced $648 million in agricultural and construction notes through Banc of America and JPMorgan Securities jointly. As previously mentioned, money market tranche underperformance persisted, with the 0.36-year A1 notes priced at one basis point over four-month Libor compared to guidance in the three basis points under range.
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