ABS

Shares of Fannie Mae and Freddie Mac fell sharply again Friday morning, with Fannie's stock price down 21% and Freddie's down 22% on the day in morning trading.

Federal regulators tried to assure the financial markets yesterday that mortgage lenders Fannie Mae and Freddie Mac “are adequately capitalized,” while lawmakers said there is a growing consensus that the Federal Reserve Board should be granted more regulatory authority over broker-dealers.

Hertz is slated to issue what will be its first securitization deal outside of the U.S. The 1.5 billion ($2.4 billion) International Fleet Financing 1 will be a multi-jurisdictional transaction covering Australia, France, Italy and the Netherlands.

Mexico plowed forward in June, with about Ps11.2 billion ($1.09 billion) in structured finance issuance, as measured by local shop IXE. That was only a 6% drop from the Ps11.9 billion placed in the same month last year, a clear sign that activity hasn't been severely crimped by retreating liquidity.

The recent departure of Noel Kirnon, global head of structured finance

Moody's Investors Service last week downgraded U.K. mortgage lender Bradford & Bingley's long-term ratings.

Fitch Ratings said last week that the European ABCP market is bottoming out. Recent figures suggest that the worst of the ABCP market contraction is over.

The European primary market remained as slow as ever last week. Deals continue to be originated for central bank repo collateral, and there is no indication of when primary market activity will pick up again, market analysts said.

When the market was in good shape, it drew a parade of Russian lenders keen to finance their brisk clip of mortgage origination.

ABS market trading remained woefully slow last week, according to traders, who said they expected this pace to continue at least until Labor Day.

For the first time since the Canadian securitization market came into existence, issuers are able to sell asset-backed notes to U.S. investors without dealing with withholding tax issues for non-exempt transactions. Elimination of withholding tax on arms-length payments of interest to U.S. investors came at a critical time for many Canadian issuers faced with few, if any, liquidity alternatives. Such issuers are now able to tap the term securitization market and extend the offerings to qualifying U.S. investors. The notes may also have credit enhancement in the form of a performance guaranty where the Canadian originator is a subsidiary of a foreign parent. These securities should be very attractive to U.S. investors looking for highly rated notes.

As deal flow has fallen silent in the subprime mortgage and CDO markets, forecasts that ABS is in its death throes have grown louder and more confident.

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

Wachovia appointed Robert Steel as chief executive officer effective immediately, according to a release from the firm.

Moody’s Investors Service has reviewed the impact of the financial guarantors’ mark-to-market losses relating to CDS’ in a new report released Wednesday.The report is titled Interpreting Financial Guarantors’ Mark-to-Market Losses.

Standard Chartered Bank has completed Start V CLO, its fifth CLO transaction under its Start CLO series.

Prostpect Mortgage has signed an agreement to acquire the majority of Indymac Bancorp’s retail mortgage branches, according to Tuesday’s Prospect release.

Five trade associations who are co-sponsors of the Joint Associations Committee (JAC) have released Structured Products: Principles for Managing the Distributor-Individual Investor Relationship.

Treasury Secretary Henry Paulson on Tuesday supported expanding the use of covered bonds by U.S. institutions to provide alternative sources of liquidity.

Moody’s Investors Service has released a new report called ABS Market in Japan: 2Q 2008 Market Review.