ABS desks resembled little more than ghost towns last week, with a good portion of asset-backed market players enjoying the Caribbean Sea and the Bahamas at Information Management Network's ABS East conference (see story, page 1).
No issuance was reported, and secondary trading was light.
"Monday and Tuesday morning were not slow - not extraordinarily busy - but not slow," said an ABS trader. "It was pretty slow the rest of the week. All the big hitters, all the big decision makers are down there in the Bahamas."
Though, the market did see some buyers in two-year term subprime auto paper; an observer noted that there were "few trades here and there, nothing of any real size or consequence" throughout the week.
The absence of new deals also helped tighten spreads slightly on the week. "There's not a whole lot of trading I can benchmark them off, but they certainly haven't widened," one trader said.
This week, though, is shaping up for some deals to get done, mostly transactions that were leftover from last week. After a record-breaking month in September, October is shaping up to be fairly busy as well, though levels seen last month aren't projected to surface.
"October, it's traditionally not a big month for new issuance," said an ABS trader. "I don't think we're looking at a weak October by any stretch, but I don't know how the supply calendar is going to shape up."
Rumors of deals to be coming to market this week include a subprime credit-card transaction; the issuer was not known at press time.
Right now, demand in asset-backeds is strong because of some turmoil in the corporate market. "There's so many credit events last month that just killed bonds, that if you look to the asset-backed sector, there's really not a whole lot credit exposure like you have in the corporate market," said an ABS trader.
"There are guys that are scared of the corporate market and put the money in the asset-backeds instead, as kind of a safer haven - a kind of a Treasury surrogate," he added. "Something that offers some incremental yield compared to Treasurys, but is not vulnerable to all the landmines you're going to hit inevitably if you own a big corporate portfolio."
Marvin Gaye Bonds
The children of Motown legend Marvin Gaye have decided to issue royalty stream bonds on Gaye's catalog of 200 songs and compositions that is valued at $100 million. The Pullman Group will manage the transaction. The deal marks the first time the estate of an entertainer has issued royalty-related bonds.