ABS

The Obama administration's white paper on housing finance reform might have been short on details on how the government plans to initiate housing finance reform.

Lawmakers laid out a series of ambitious deadlines in the Dodd-Frank Act, requiring regulators to complete roughly 170 new rules by July.

After waiting ten months, Redwood Trust issued a second Jumbo RMBS, injecting some optimism into the private-label mortgage securitization market.

A squabble over bragging rights for making the first whole business securitization since the financial crisis speaks volumes about Wall Street's ambitions for this slowly reviving asset class.

With economic growth in Argentina having surpassed 8% last year and unemployment diminishing, it is no wonder the country's consumer ABS sector boomed in 2010. Collateral, after all, was in generous supply as more optimistic consumers made purchases on credit. This year, observers said we should expect more of the same, although the pace of economic expansion is projected to be closer to half of last year's figure. Concern about rising delinquencies is moderate for now, and there's none of the bubble anxiety beginning to infect neighboring Brazil.

The Dodd-Frank Act's Section 939A prompts banking regulators to remove any "reference to, or requirements of reliance on, credit ratings" in their regulations and capital requirements. The uncertainty of how regulators will interpret those words has the ABS industry bubbling and proposals emerging.

Borrower behavior changes over time and investors and lenders should constantly adjust the way they utilize the different credit score values to accurately predict loan performance, according to officials from FICO and VantageScore.

Tomorrow the European Central Bank (ECB) is set to extend its minimum two-rating requirement for all existing ABS to remain repo eligible at the central bank’s window. This effectively ends the grandfathering period that started a year ago.

Jay Kim, co-head of Barclays Capital's U.S. asset securitization team, will be moving to Credit Suisse in May to head up the bank's asset finance team. He will be bringing around 10 Barclays bankers with him.

DBRS has assigned provisional ratings to the DSC Floorplan Master Owner Trust Series 2011-1 notes. The DSC Floorplan Master Owner Trust Series 2011-1 transaction represents the first issuance out of a newly created master trust and the second securitization of Dealer Service Corp’s (DSC) wholesale receivables. The trust assets collateralizing the series’ issuance include a revolving pool of receivables originated in connection with the purchase and financing by motor vehicle dealers of predominantly used automobiles and trucks. Dealer Services Corp. is the sponsor and originator of the receivables. DSC was formed in 2005. The management team has considerable experience in this specialized sector within the wholesale market. DSC funds loans to independent dealers in order for those dealers to access vehicles at used vehicle auctions. This market is a well established part of the automotive industry, with two very large auction companies: Manheim Inc., ADESA Inc. and a host of smaller or regional auctions like ABC Auctions and a large number of smaller independent auctions. Credit enhancement for the Series 2011-1 Class A notes is 17.75%. This amount is derived from 10.0% subordination of notes, 7.50% residual interest and 0.25% reserve account. Since this is a master trust, investors are expecting to be repaid on the expected date. If there were an amortization event, enhancement will build over time since the Class A Notes are paid first before the subordinate notes receive any principal. The reserve account is also calculated as a percent of the initial notes and will grow as a percent of the outstanding notes when those notes are repaid. The structure will consist of a three year interest only period followed by an expected principal repayment on the expected principal payment date (March 15, 2014). If an early amortization event occurs, noteholders could be paid back their principal earlier than (March 15, 2014). If this were to occur, the senior most class of notes, Class A, will be paid 100% of the principal before the next senior class of notes, Class B. Dealer Services Corp. (DSC) is in the market with its DSC Floorplan Master Owner Trust Series 2011-1 transaction.The over $252 million deal is the firm's first issuance out of a newly created master trust and the second securitization of Dealer Service Corp’s (DSC) wholesale receivables, according to a DBRS presale report. The transaction is backed by receivables originated in connection with the purchase and financing by motor vehicle dealers of predominantly used automobiles and trucks. According to the rating agency, DSC was formed in 2005 and its management team is considered to have considerable experience in this specialized sector within the wholesale market. The firm finances loans to independent dealers so those dealers to access vehicles at used vehicle auctions. This market is a well established part of the automotive industry, with two very large auction companies: Manheim, ADESA and a host of smaller or regional auctions like ABC Auctions as well as a large number of smaller independent auctions. The structure comprises of a three-year interest only period followed by an expected principal repayment on the expected principal payment date on March 15, 2014, DBRS said. The indenture trustee on the transaction is Deutsche Bank Trust Co. Americas and the owner trustee is Wilmington Trust Co. while the back-up servicer is Portfolio Financial Services Corp.

Manager Activity: Autos Book Runner Amount (US$ Mil) Rank Mkt.

A California lender began selling jumbo loans this month to global asset manager BlackRock, proof that private investors are not waiting for the securitization market to fully recover before getting back into mortgages.

GC Securities placed $135 million of protection for Hartford Fire Insurance Co. This was done through Hartford's existing catastrophe bond shelf program called Foundation Re III Ltd.

Gatwick Airport priced its £600 million ($968 million) structured finance deal. The offering was structured with two 'BBB+sf ' fixed-rate bonds rated by both Moody's Investors Service and Fitch Ratings.

Fast-food-chain operator Church's Chicken is paying 6% on its $220 million in bonds backed by franchise fees and store revenue, a person familiar with the matter said Friday.

BNP Paribas is sole lead on a cross-border local-currency denominated transaction that securitizes the rights to receive future payments from Peruvian state-owned water utility SEDAPAL, according to market sources. A BNP official did not return a request for comment.

As Spanish savings banks known as cajas merge and create new private banks, covered bonds that pooled together the assets of several cajas will disappear, according to a recent report by Moody’s Investors Service.

European structured finance products continue to absorb elevated credit risks very well from a performance standpoint, according to Unicredit analysts.

Macquarie Equipment Finance (MEF) is in the market with its first equipment lease securitization deal. MEF is the mid-ticket equipment leasing subsidiary of Macquarie Bank Ltd. (MBL).

After a strong 2010 in Colombian structured finance — issuance grew more than 50% from 2009 — Fitch Ratings sees reasons for a repeat performance in 2011. Placements hit $7.8 billion last year, from a variety of companies in the corporate and financial sectors. The country’s Fannie Mae-esque Titularizadora Colombiana accounted for 28% of all issuance in 2010, turning out three peso-denominated RMBS and three inflation-indexed RMBS. The withdrawal of a tax credit for RMBS buyers should cut into volumes this year, but other asset classes are primed to pick up the slack, the agency said. Titularizadora itself may be involved in some of these as the agency has set up an offshoot to securitize non-housing ABS, such as auto loans, and expects to start issuing this year. Government-backed deals to fund infrastructure are also on the horizon, Fitch said.