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An interesting situation could be developing with respect to the NextCard securitizations, which are, reportedly, one month away from three consecutive months of negative excess spread. This would be the second early amortization trigger hit by the NextCard master trust. Apparently the Federal Deposit Insurance Corp. is having trouble selling the portfolio, despite reports of having narrowed the auction process down to four potential suitors. As the market is keenly aware, the FDIC exercised its prerogative to keep the trust from entering into rapid amortization when it took NextBank into receivership in February. However, unlike that incident, a three-month negative excess spread is a credit event trigger.

Internet loan sale platform DebtX (see ASR 6/10 p 8) will be offering roughly $700 million of performing loans underwritten by the U.S. Small Business Administration on behalf of Insignia Financial Group. The sale is scheduled for Dec 3, 2002. Insignia is a commercial real estate services provider, based in Boston.

The portfolio consists primarily of loans made through the disaster assistance loan program as well as another small business program, which makes property-backed loans. In total more than 30,000 loans are for up for sale.

Business Loan Express is in the market with its second deal of the year, a $100 million conventional small business loan transaction via Wachovia Securities. BLX's first 2002 deal, which priced in May, was backed by SBA-guaranteed loans.

According to a report from Merrill Lynch last week, market participants at the Barcelona conference seemed to agree that the European structured credit market was less active this year than last year. The report said, "The longer marketing times necessary to sell, especially CDO products, certainly added to that feeling. The unsatisfied appetite for consumer-related ABS and the ever half-empty allocations for commercial real estate paper furthered that feeling. The negatives and uncertainties, such as potential unfavourable risk weighting regulations, undiscriminating criticism of off-balance sheet vehicles and structures, broad-brushed coverage of CDO downgrades also added to the general perception of a market in retreat and lacking of dynamism."

In a letter sent last week to the New York State Assembly Speaker Sheldon Silver, The Bond Market Association (BMA) cautioned that pending Assembly Bill 11856 that is supposed to curb predatory lending practices might dramatically curtail the availability of residential mortgage credit to low and moderate income borrowers. Furthermore, the law would also make it significantly harder for New Yorkers with imperfect credit records to get financing for mortgages.While the State Legislature is currently considering the bill that proponents say would stop predatory lending in the "subprime" arena, BMA said in a release that the most likely effect of the bill is to drive lenders and loan purchases out of New York's $3.9 billion subprime market.

People

Jorge G. De Presno Arizpe will be joining Thacher Proffitt & Wood as a partner in the Mexico City office. De Presno has been dedicated to labor law for more than 20 years and has worked as a trial lawyer and consultant in individual and collective labor conflicts. Additionally, De Presno Arizpe is a professor for various law classes at the Universidad Iberoamericana and Universidad Panamerican in Mexico City.

Moody's Investors Service's Jim Duca was promoted to managing director of the rating agency's CMBS rating team. Together with managing director Tad Philipp, Duca will be responsible for Moody's commercial real estate conduit, large loan, and CMBS ratings businesses. Both Duca and Philipp, who will both report to group managing director Noel Kirnon, will oversee a group of 36 associates.

JPMorgan promoted Christian Schiavone to team leader of the home equity business within JPMorgan's North American ABS and Conduit Group. According to a release by the firm, as a vice president in this group, Schiavone "has demonstrated his ability to lead a team recognized for its thoroughness and creativity on behalf of the firm's home equity clients." Before joining JPMorgan, Schiavone was a vice president at Chase Manhattan Funding, which is the subprime division of Chase Home Finance. He also was a director in the residential mortgage group at Fitch IBCA.

Calendar 2002

July 9-10: New York, NY - The Strategic Research Institute will host the third annual Forum on ABCP Liquidity/SIVs. For more information, visit www.srinstitute.com/ca276

September 5-6: London, England: The Strategic Research Institute will present The Premier European Forum on ABCP. For more information visit www.srinstitute.com/ca273

October 6-9: Miami, FL: The Strategic Research Institute will host the The ABS South Beach Industry Summit. For more information visit www.srinstitute.com/ca280

October 9: New York, NY - The Bond Market Association presents the Annual Awards Dinner. For more information, call 212-440-9429 or email mgarcia@bondmarkets.com.

November 7-9: Palm Beach Gardens, FL - The Bond Market Association's Fixed-Income Securities Operations Conference will be held at the PGA National Resort & Spa. For more information, call 212-440-9429 or email mgarcia@bondmarkets.com.

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