ABS

auto ABS 9% credit card ABS 8% enterprise finance 0% equipment ABS 2% real estate ABS 71% structured settlements 0% student loan ABS 9% trade receivables 1%

The U.S. House of Representatives voted last Wednesday to reform the credit ratings industry. Observers in the asset securitization industry responded with a mixture of relief, dismay, and by setting up a potentially bitter fight to bring changes to a previously untouched segment of the financial services industry.

Securitizations backed by reverse mortgages are expected to boom in the second half of this year, with as many as six deals being discussed in the market, according to private and rating agency sources. The sector has piddled along in recent years, restrained by low volume and secondary market unfamiliarity. Now, sizable strides in origination volume and more accommodating regulatory changes have drawn the interest of investment bankers - always happy to stumble upon a new and, at least initially, higher-yielding asset class.

NEW YORK - As far as growth in emerging asset classes is concerned, extendible notes in ABCP programs and student loan-backed ABS have both come a long way recently. Now their paths are converging.

The first "roll," or introduction of a new series of names for the ABX.HE, is expected to proceed smoothly this week, according to industry sources. That could be due in part to the fact that - in contrast to synthetic indices of corporate names - when the ABX.HE 06-2 series is introduced this week, a wave of cash is not expected to slosh to it from the 06-1 series. While the new series will be more liquid than the previous series, total outstanding volume is not expected to go to zero for many years, UBS analysts said. The index will also not switch on Wednesday from its current 20-name format to include more names, as some market players had hoped.

The broader bond market perked up in the face of a faltering stock market, and the ABS sector prepared to follow suit, with almost $15 billion in deals that priced and were being marketed last week. By press time, about $7 billion of that amount was launched.

Resource America Inc. subsidiary Resource Real Estate is gearing up to close the first of two CDOs it plans to bring to market this year. The $345 million deal, Resource Real Estate Funding 2006-1, is backed primarily by mezzanine, B-notes, and a 20% share of commercial real estate whole loans.

NEW YORK - Acquiring a pool of loans isn't what it used to be. Mounds of sensitive consumer information moves around the structured finance market at dizzying speeds these days. Last week, the American Securitization Forum asked market participants if they have taken the right steps to protect against information breeches, and if they were aware of the legal burdens tied to consumer information. These were asked at the ASF's sunset seminar on Securitization Ethics and Professional Responsibility held here.

Robert D'Loren has been moving fashion trends into the arms of consumers for years - so why haven't you heard of him?

Dwindling home price appreciation has its perks after all. After ending the first half with issuance flat to the same period last year, the ABS market is poised to do a bit better for the rest of 2006, owing mainly to strong performances from the student loan and credit card sectors.

Citigroup Global Markets did not have much climbing to do in order to claim first place in the ABS lead manager rankings for the first half of 2006, according to data from Thomson Financial. After placing second in the league tables at the end of the first half of 2005, Citigroup has emerged as the top lead manager so far for 2006.

As the U.S. CDO sector rounds the corner into the latter half of 2006, market participants are taking time to reflect on some of the trends - from collateral spreads that continue to grind tighter to the increasing use of synthetics - that continue to mold this market. ABS CDO issuance in the first half of the year ballooned to more than $126 billion, almost double the $64.5 billion reached during the same time period last year, according to data maintained by Thomson Financial.

Merrill Lynch again seized the top spot among U.S. CDO underwriters in the first half of the year, selling 27 deals to the market totaling some $22.2 billion and a 16.8% market share, according to data maintained by Thomson Financial. The investment bank managed to reclaim its position back after losing it in the first quarter to Citigroup Global Markets, a shift some speculated was the result of the loss of a handful of staff members led by former Merrill star Chris Ricciardi.

It has been three years since the Global Research Analyst Settlement was announced, but it appears not every firm on the Street got the message. Wachovia Corp.'s capital markets group just cost the firm a $25 million fine, stemming from charges of research-related conflicts of interest. Similar charges were lobbed against Wachovia by a CDO research analyst nearly one year ago.

Merrill Lynch Bank USA, a subsidiary of Merrill Lynch, is preparing to launch its first multiseller asset-backed commercial paper program called Zane Funding, a much more flexible program than the existing Deer Valley Funding.

The outlook for tobacco bond securitizations remains stable for the time being, said Fitch Ratings. The rating agency said this after the Supreme Court of Florida decided that several tobacco companies do not have to pay a $145 billion settlement stemming from a class-action lawsuit against them.

Asset securitization professionals did not have a huge workload awaiting them after the Independence Day holiday last week, as a mere $6 billion in potential new issuance was being marketed. Some market professionals predicted that just $3 billion in new issuance would price by week's end.

by Dina J. Moskowitz, assistant general counsel, Natalie Abrams, associate general counsel, and Amy Martin, director, Standard & Poor's

Full Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market Managers Proceeds (mils) Rank Mkt. Share # of Issues Citigroup 6,027.5 1 17.8 12 Wachovia Corp 5,432.9 2 16.1 10 JP Morgan 5,062.5 3 15.0 12 Deutsche Bank AG 2,690.2 4 8.0 8 Royal Bank of Scotland Group 2,169.3 5 6.4 5 Banc of America Securities LLC 1,925.9 6 5.7 3 Merrill Lynch & Co Inc 1,847.5 7 5.5 4 Barclays Capital 1,603.4 8 4.7 3 Credit Suisse 1,550.0 9 4.6 3 HSBC Holdings PLC 1,329.2 10 3.9 2 Industry Total 33,810.0 - 100.0 43 Source: Thomson Financial

Full Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market Managers Proceeds (mils) Rank Mkt. Share # of Issues Merrill Lynch & Co Inc 20,899.6 1 16.6 26 Citigroup 18,158.5 2 14.4 30 Deutsche Bank AG 13,959.1 3 11.1 17 Banc of America Securities LLC 9,548.4 4 7.6 22 Credit Suisse 8,382.2 5 6.6 15 Bear Stearns & Co Inc 8,063.9 6 6.4 16 UBS 7,224.1 7 5.7 37 Royal Bank of Scotland Group 6,499.7 8 5.2 8 Wachovia Corp 5,823.8 9 4.6 12 Morgan Stanley 5,216.0 10 4.1 21 Industry Total 126,166.1 - 100.0 249 Source: Thomson Financial