ABS

The House of Representatives is set to debate and vote on its regulatory reform package this week. The proposed legislation includes several bills that address issues important to securitization, including the risk retention on sales and securitizations of mortgages.

The destabilizing news out of Dubai is inarguably a negative for issuers out of the region - what many investors effectively saw as implicit sovereign support has now vanished.

Overview

The financial crisis has brought a renewed consciousness to ABS investors - they need to get to the nitty-gritty of what they own. Nora Colomer's article this month focuses on this very issue.

The recent uptick in primary, non-retained issuance in Europe could be more than just a one-off event.

Highland Capital Management is working on an array of loan-focused funds that it hopes to launch at the beginning of 2010.

Fears are growing of a renewed surge in defaults on option ARMs (OAs). Investors have increasingly expressed concern that a spike in defaults driven by mandatory payment recalculations (the recast "time bomb") is building for the roughly $100 billion unpaid balance of 2006-issue loans, and question whether modifications under the Home Affordable Modification Program (HAMP) can be used to help significant numbers of troubled OA borrowers.

Issuance of top-rated credit card ABS has picked up this year, but investors have faced a dearth of subordinated tranches until GE Capital's $76 million Class B five-year tranche priced Nov. 25 at 285 basis points over mid-swaps, setting a benchmark for more issues.

This year, mortgages have done very well courtesy of the substantial buying from the Federal Reserve.

Investment firms are also increasingly unwilling to trust the work of others. This is coupled with the need for more granular information down to the borrower level. These have driven market participants to build their own models using more detailed data from various sources and are closely tied to increased transparency in transactions.

The renomination of Federal Reserve Board Chairman Ben Bernanke wasn't supposed to be a nail-biter, but the prospect of another four-year term has lawmakers from both sides throwing up roadblocks.

Standard & Poor’s late Wednesday raised the counterparty credit rating of Ambac Assurance Corp. to 'CC' from 'SD', selective default. The agency also affirmed Ambac’s financial strength rating of 'CC' and changed its outlook on the guarantor to developing from negative.

Assured Guaranty, the holding company of the two principal players in the bond insurance industry, is expected to raise at least $499 million of capital today when its offering of 23.9 million common shares closes with underwriter UBS Securities.

A steep yield curve could selectively keep earnings/dividends for agency mortgage real estate investment trusts above normal levels even though a rally in the sector is running out of steam, according to a report Wednesday by Sandler O'Neill & Partners, which is initiating coverage on the sector.

The November Mortgage Monitor report by Lender Processing Services (LPS) in Jacksonville, Fla. reveals a nationwide loan deterioration ratio higher than 3:1, indicating that for every one loan which improved, three more loans are deteriorating.

The list of eligible Term Asset-Backed Securities Loan Facility (TALF) deals continued to grow, although December issuance has tapered off with the year-end approaching, market sources said.

MF Global was approved by the Federal Home Loan Bank System (FHLBank) as an underwriter and a reallowance dealer.

Realpoint was selected to rate the new issue CMBS offering by Inland Western Real Estate Trust. The transaction, the first new-issue CMBS to be rated by Realpoint, is being underwritten by JPMorgan Securities.

Just after the first new-issue CMBS launched late last month, talk of a new deal about to come to market has sparked hope that things may be improving in the CMBS space.

The 30- and 15-year and one-year ARMs rates all moved to new record lows in the week ending Dec. 3, according to Freddie Mac's weekly survey.