Arrow Financial Services recently closed its first deal since the third quarter of 2002, a $40 million, self-brokered securitization of consumer debt. Arrow's deals are typically backed by a hodgepodge of assets, such as charged-off utility bills and credit card receivables. This was the first Arrow deal to be treated as debt for accounting and debt for tax purposes (previous deals have used sale accounting). Moody's Investors Service was the sole agency on Arrow's most recent deal.
Given its expertise in esoteric consumer assets, Arrow has also been hired on deals as a backup servicer, and would be willing to be an investor in deals it shadows. The firm is one of - if not the only - specialty consumer finance servicer rated "strong" by Standard & Poor's.
Boutique structured finance investment shop and hedge fund manager, Highland Financial announced that it has hired Richard T. Sauerwein as a vice president with responsibilities in credit risk products and risk management. Sauerwein, who joins Highland from Stonehenge Financial Partners, will help the firm expand into more credit-sensitive products. Prior to Stonehenge, Sauerwein had worked at Financial Security Assurance and Standard & Poor's. Highland Financial is not affiliated with frequent CDO issuer Highland Capital Management.
Citigroup Global Markets recently hired Albert Lin from an undisclosed hedge fund to work in its ABS research strategy group as an analyst, reporting to group head Ivan Gjaja. Jordan Erenrich, meanwhile, returns to his position in the mortgage research group, where he reports to Lakhbir Hayre. Erenrich had been filling in for the recently departed Anne Kari.
As an obvious reflection of the slowdown in mortgage origination volume, Fannie Mae has issued roughly $28.2 billion mortgage-backeds - a continually declining number - in February, a fact noted by researchers at Credit Suisse First Boston. Freddie Mac, meanwhile, has issued $21.6 billion for the month to date.
ABN AMRO Mortgage, meanwhile, reported January mortgage production came in at $3.4 billion, via 19,800 loans, the company reported last week. This figure is down 70% from the previous January's $11.4 billion. The leading loan producer within ABN AMRO's lending units was InterFirst Wholesale, which contributed $2.7 billion of origination volume, down 71% from the previous January's $9.2 billion.
Existing home sales fell by 5.2% in January but remained above the 6 million annualized pace mark, compared with December 2003. Existing homes sold at a 6.04 million annual rate last month, lower than December's revised 6.37 million. "The reality is that the pace of existing home sales is extremely vigorous and by no means should today's data be interpreted as weak on an outright basis," wrote analysts from RBS Greenwich Capital. There were 2.20 million homes for sale for a stock of 4.4 months in January. This is compared with December's stock of 4.3 months. The median home price dropped to $168,700 last month versus $174,800 in December.
Australian Mortgage lender Interstar Securities Management has registered a new shelf registration for $2 million in Australian mortgage-backed securities, according to records filed with the Securities and Exchange Commission. The Interstar Millennium Series 2004-2G Trust, comprised of floating rate Class A, Class AB and Class B notes, will price off of one-month LIBOR. Barclays Capital and JPMorgan Securities were named as joint-lead managers.
Vanguard Car Rental's ARG Funding unit closed the first auto rental fleet lease ABS with an auction rate structure in over two years recently. The $500 million ARG 2004-1 deal, led by Lehman Brothers, consisted of seven triple-A rated auction rate securities, to be reset monthly. Fleet lease ABS had been a fairly common practice prior to Sept. 11, 2001, but tapered off as the auto rental business slowed.
Moody's Investors Service upgraded 41 classes from 25 different auto loan ABS, due to increased credit enhancement resulting from the inclusion of non-declining credit enhancement and initial cash trapping measures built into trusts in the 2000, 2001 and 2002 vintages. Among the trusts that had classes upgraded were AmeriCredit's AMCAR, BMW Vehicle Owner Trust, Chase Manhattan Auto Owner Trust, Citigroup's SSB Auto Loan Trust, Ford Credit Auto Owner Trust, Hyundai Auto Receivables Trust, M&I Auto Loan Trust, Mitsubishi's MMCA Auto Owner Trust, USAA Auto Owner Trust and Bear Stearns' Whole Auto Loan Trust.
Lehman Brothers expanded its weekly spread data disseminated to investors, beginning last week. Lehman now reports fixed-rate spreads versus swaps as a benchmark instead of just over U.S. Treasurys. In addition, Lehman began reporting stranded cost ABS spreads, as well as the full spectrum of subordinate auto loan and credit card subordinate bonds.