ABS

Moody's Investors Service downgraded Aurora Loan Services' Servicer Quality (SQ) ratings: primary servicer of prime residential mortgage loans downgraded from 'SQ2' to 'SQ3'; primary servicer of subprime residential mortgage loans downgraded from 'SQ2-' to 'SQ4+'; special servicer downgraded from 'SQ2-' to 'SQ4+' and master servicer downgraded from 'SQ1-' to 'SQ3+'

After a majority dealer vote, the Markit iTraxx European investment grade and

In the wake of the announcement of the Lehman Brothers bankruptcy, ABS market participants are examining its effect on the industry.

Bank of America has bought Merrill Lynch, the most recognizable name in the brokerage industry, in an all stock transaction valued at $50 billion.

Lehman Brothers' filing for protection under U.S. Chapter 11 is likely to lead to some rating action on a number of European CMBS transactions, says a Barclays Capital research note.

Stifel Financial Corp. announced that Joseph Sullivan, a director of the firm and head of fixed-income capital markets for the company’s principal subsidiary, Stifel, Nicolaus & Co. will resign from these posts to become chief administrative officer of Legg Mason.

The Lehman Brothers-owned Aurora Loan Services — the nation's largest alternative-A servicer with a portfolio north of $80 billion — could have a new parent company very soon.

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

Islamic finance had its start in the 1960s and 1970s with the influx of petrodollars into the Gulf region. The rapid development of Middle East markets - Saudi Arabia, Kuwait and the United Arab Emirates - has stoked interest in a type finance that is based on the principles of Shari'a. Industry experts estimate that Islamic finance has enjoyed double digit annual growth with nearly $1 trillion put to work in Shari'a structures.

The Bank of England (BofE) is looking less likely to extend the terms of its special liquidity scheme (SLS), which is due to end on Oct. 21.

The U.K. government last week announced measures intended to stem house price deflation and mortgage defaults. The measures would also ultimately boost the deteriorating performance in U.K. RMBS.

While global markets reel from credit compression, Mexican spreads have edged out. But that has not deterred originators from entering the market with new asset classes. Case in point: GMAC Mexicana is in the pipeline with a first-time deal backed by cash flows from loans to affiliated dealers.

It looks like the Argentine government isn't out to make friends in structured finance. The administration of Cristina Kirchner last August abolished certain tax exemptions for financial trusts. This will cut the available excess spread - after losses - in some local ABS deals by 35%, according to a report from Moody's Latin America.

The European Central Bank (ECB) revealed changes to its repo liquidity program last week. The moves are intended to make the repo liquidity option less appealing for ABS issuers.

The Ukraine's Bank Khreschatyk has issued its first covered bond, a three-year UAH70 million ($14.7 million) trade governed by local law.

As ABS industry participants scour the market for new deals, covered bonds remain a beacon of potential liquidity for the desiccative pipeline. One question, however, remains: Where are these new programs?

It goes without saying that structured products, particularly in the ABS space, are not the once attractive asset that had investors flocking to the sector.

Last week's highlight was the government's takeover of Fannie Mae and Freddie Mac. Since the announcement was made on Sept. 7, a Sunday, it led to a sharply higher open in MBS last Monday.

The beginning of September was wracked with uncertainty as Fannie Mae and Freddie Mac struggled with liquidity issues. That was until the government stepped in with a bailout plan for the GSEs. However, the government cannot stop growing fears of mounting losses at Lehman Brothers, which continued last week.

The importance of Fannie Mae and Freddie Mac not only to the U.S. mortgage market but to the worldwide economy was demonstrated last week when the U.S. Treasury Department put the two GSEs under conservatorship.