Fueled by new conduit facilities and a monoline surety diversification strategy, AmeriCredit Corp. has nearly completed the turnaround of the year. At a time when the capital markets were unreceptive to a non-prime auto lender, AmeriCredit's discipline in trimming originations, innovative use of conduit facilities and opportunistic surety selection have made it the darling of the financial world and more than quadrupled its stock price since February.

Back in the first quarter, things did not look so bright for the Fort Worth, Tx.-based AmeriCredit and it took evasive action. With its stock price reaching a 52-week low of $1.55 per share, the company needed liquidity and securitization was the only avenue through which it could access the capital markets.

Assisted by financial advisor Deutsche Bank Securities, AmeriCredit decided to drastically cut loan originations and start a surety diversification program. Throughout the year, AmeriCredit has purchased wraps from MBIA, XL Capital Assurance, as well as returning to FSA for one transaction - something many thought would not happen.

Additionally, DBSI set up a warehouse conduit facility and purchased $1 billion of its collateral in a whole loan sale. All told, AmeriCredit raised $3.2 billion in cash at its bleakest hour.

"With the whole-loan purchase facility in place, we were able to unclog the buildup of receivables we were experiencing while implementing our reduced origination policy," said senior vice president investor relations Kim Pulliam. "The whole loan purchase facility helped us get back on track by giving us access to liquidity at a time when we wouldn't have economical funding. It also meant that we had a lender confident in us and in our prospects."

Another remarkable story this year had to be the securitizations of Capital One Financial, considered by many as the best value of 2003. Capital One, which saw its name tarnished in 2002 after it announced a non-binding MOU with federal banking regulators, spent the entire first quarter on the sidelines, presenting its case to investors at bank-sponsored gatherings and industry conferences. The result: major gains for investors who bought Cap One's CCABS.

"Cap One's solid fundamentals and improved investor disclosure is the story," said Craig Leonard, head of U.S. ABS Syndicate at Barclays Capital, which has been at the forefront of the turnaround. "Spread tightening has come from solid earnings and continued good performance. Feedback from the buy-side community suggests that Cap One still exhibits good value compared to their competitors, which is another reason why people are looking to buy and spreads keep tightening."

While Cap One's first offering from its COMET shelf this year priced April 4 at comparably wide levels (39 basis points over one-month Libor for three-year triple-As), investors were quickly rewarded by Cap One's positive 1Q03 earnings later that month. Spreads for that transaction, led jointly by Barclays Capital and Credit Suisse First Boston, were recently quoted at 10 basis points over Libor, a gain of 29 basis points over just a six-month period - something extremely rare in the credit card sector.

Spreads for all of Capital One's offerings this year have paid big dividends for investors, exponentially so down the credit spectrum, which some believe has fueled the sector-wide tightening seen in credit card ABS in 2003. Spreads for Cap One COMET ABS were recently quoted at the following levels for various tranches: two-year triple-A A2 in 4 basis points; three-year single-A fixed B2 in 80 basis points; three-year single-A floating B2 in 72 basis points and seven-year floating triple-B C4s 50 basis points tighter.


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