While details and the validity of the rumors could not be confirmed, ASR was hearing at press time that an Ohio judge made a tentative ruling concerning healthcare providers, National Century Financial Enterprises, and the securitization lockbox. The judge has apparently directed the providers to continue paying into the lockbox, but has instructed the lockbox trustee, presumably Huntington Bank, to let no payments out of the lockbox until the situation is cleared up.
Asset-backed commercial paper outstandings barely changed in the month of October, at roughly $712.1 billion, down $609 million from the prior month. Though December is typically a heavy month for the market, there is a good chance outstandings will fall short of last year's close of approximately $745 billion.
First Republic has come to market with a $370 million ARM deal. The transaction, which is being led by RBS Greenwich Capital, is expected to close in December. This is the bank's fifth ABS in the past two and one-half years. There was no wrap required due to "high asset quality," sources close to the transaction said. The deal's senior certificates carry a triple-A rating from both Moody's Investors Service and Standard & Poors. Co-managers on the deal are Salomon Smith Barney, Keefe, Bruyette & Woods, Sandler O'Neill & Partners and First Republic Securities Co.
Standard & Poor's lowered its rating on Banc of America Large Loan Inc.'s commercial mortgage pass-through certificates series 2001-WBM to triple-'B'-plus from single-'A' and removed it from CreditWatch with negative implications, where it was placed Oct. 23. The certificates are backed by a $130 million fixed-rate interest-only loan secured by a leasehold mortgage on a Marriott Hotel on Waikiki Beach, Hawaii. The rating agency cited the lowering of Royal Indemnity Co.'s (Royal) financial strength rating to triple-'B'-plus from single-'A' on Nov. 7. Royal reinsures Financial Structures Ltd.'s guarantee to pay timely interest and ultimate principal on the above referenced loan.
Losses in CMBS deals are on the rise, according to a recent report by Fitch Ratings. Results from a review made by the rating agency of the percentage of loans that experienced a loss showed that loss severity increased to 33% at the end of last year from 18.5% at the end of 2000.Fitch predicts the number of losses to increase further this year because of the resolution of some large loans with considerably high severities. Aside from a weakening real estate market, there has also been the high profile downturn of the hotel sector as well as the much talked about retail bankruptcy filings.
Lehman Brothers plans to launch a new Danish mortgage index on Dec. 1. The firm said the Association of Danish Mortgage Banks and Danske Bank have been involved in the construction of the index. It will initially be a separate entity but may be rolled into Lehman's broader market indexes as soon as global investors become familiar with the asset class. The new index will include investment-grade and fixed-rate mortgages with a minimum maturity of one year issued by Realkredit Danmark, Nykredit, BRFkredit, Nordea Kredit, Danske Kredit, and Totalkredit. Additionally,
only securities denominated in Danish krone with a par amount equivalent to at least 300 million euros (approximately $299.2 million) will be included. The index will have an initial estimated value of 108 billion euros (roughly $107.7 billion).
Kmart is considering closing 565 additional stores, according to a story in the Atlanta Business Chronicle. According to a Merrill Lynch report, Kmart has had two rounds of lease rejections (which includes over 280 in April) since it entered into Chapter 11 bankruptcy earlier this year. Analysts have speculated that the floundering discount retailer will eventually need to close 200 to 700 stores. Kmart officials have reportedly denied the existence of a specific list of targeted stores yet but have admitted that they are in the early stages of determining which specific stores to shut down. According to company officials, they would have a good idea before the end of January 2003.
Standard & Poors said last week that for the third quarter the number of upgrades outpaced downgrades among U.S. CMBS deals, which is the first time it happened this year. There were a total of 43 upgrades while there were only 40 downgrades. However, in terms of year-to-date numbers upgrades (106) remain lower than downgrades (132).
November 21: New York, NY: The Bond Market Association's Fixed-Income Summit & Expo on E-Commerce and Technology will be held at the Marriott Marquis Hotel. For more information, call 212-440-9429 or email to firstname.lastname@example.org.
December 12: New York, NY: The Bond Market Association presents the Repo & Securities Lending Conference at The Roosevelt Hotel. For more information call 212-440-9429 or email email@example.com.