ABS

As September trading got underway following a long weekend, mortgages got off to a shaky start. Volume started off light, but picked up quickly as Treasurys turned around at mid-morning.

The Massachusetts Educational Financing Authority (MEFA) is issuing $400 million in education loan revenue bonds; it is the first private student loan securitization of the year from the state authority. The deal hits the market as private student lenders have encountered issues shoring up capital.

Much has been said about the emergence of distressed funds taking advantage of buying opportunities in the European market. However, market analysts said that prices must go wider before distressed buying really takes off.

The now nationalized U.K. bank Northern Rock's Granite master trust is reporting a rising trend of arrears since the end of last year - delinquencies have climbed to 1.52%, which is almost four times the level recorded a year ago. The number of properties taken into possession each month has also roughly doubled.

The market came off the Labor Day weekend holiday as slow as it went into it. This came as no surprise for traders, who do not expect to see a major pickup in the market given the current liquidity concerns at Fannie Mae and Freddie Mac.

Late last month, in an effort to help delinquent IndyMac Bank borrowers stay in their homes, the Federal Deposit Insurance Corp. (FDIC) announced a "systematic" loan modification plan.

Although previously regarded as a cookie-cutter asset class, the student loan product is suffering - like all the other major securitization sectors - from a lack of investor confidence. The task is to win these buyers back. Observers believe that the key to wooing the return of the investor base is a much greater understanding of the sector.

The European Central Bank (ECB) said that it no longer intends to accept ABS collateral for its repo operation if it is not backed by a liquidity facility that is worth at the minimum 20% of the deal’s nominal value.

The Mortgage Bankers Association's (MBA) quarterly National Delinquency Survey reported the delinquency rate for mortgage loans on one to four unit residential properties was 6.41% of all loans outstanding as of the end of 2Q08.

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

Lewis Ranieri, co-inventor of the mortgage-backed security, has stepped down as interim chief executive of the struggling Franklin Bank Corp. of Texas, but he will remain as chairman as the depository searches for new capital.

HSBC France, Paris, has launched an 8 billion euro ($11.6 billion) covered-bond program under French law, with the capability of issuing private placements in German law registered format.

The Securities Industry and Financial Markets Association (SIFMA) cautioned against proposals to remove references to credit ratings in regulations that the Securities and Exchange Commission (SEC) issued with the intention of avoiding overreliance on credit ratings and promoting independent analysis.

Over the next 12 to 18 months, Europe, Middle East and Africa (EMEA) region can expect stable and negative performance of its major structured finance asset classes, Moody’s Investor Service said in a report published today.

GMAC Financial Services and its subsidiary Residential Capital (ResCap) will undertake added initiatives to further optimize the mortgage business such as closing some of its businesses.

Piper Jaffray & Co. has expanded its aircraft finance team. The new additions to the team include Doug Runte, Scott Sodokoff, Dan Reese and John Covello, who will add substantial depth, breadth and an increased level of client service to the firm’s foundation of structured analytics expertise.

The D. E. Shaw Group recently tapped Richard McKinney as a managing director to oversee the firm’s newly formed asset-backed securities unit.

Andrews Kurth has formed a new practice group focusing on advising clients on matters related to the issuance, underwriting, purchase and sale of covered bonds.

Allen & Overy and docGenix launched docGenix, an independent firm offering innovative services to give financial institutions the ability to manage documentation risk.

CIFG Holding today announced that its financial guaranty subsidiaries have reached agreements to commute approximately $12 billion in structured finance exposures.