ABS

The Public Utility Commission of Texas is moving ahead with its search for an advisor for CenterPoint Energy's pending $1.8 billion stranded electricity cost bond offering, in spite of the fact that the financing order for the deal is under appeal. Early this month, the Commission posted a RFP seeking an advisor for the deal just days after the Texas Attorney General's Office filed to appeal the Commission's financing order giving Houston-based CenterPoint the green light to line up its advisor.

ABS transactions wrapped by bond insurer MBIA saw only mild spread widening in the secondary market last week, according to sources. The Armonk, N.Y.-based bond insurer received a second round of subpoenas last week from the Securities and Exchange Commission and the New York Attorney General's Office regarding a number of topics, including reinsurance contracts and credit default swaps on the company's corporate debt.

ABS analysts are saying Discover Financial Services would likely increase its ABS issuance and become an acquisition target if spun off from parent company Morgan Stanley. The unit, championed by Morgan Stanley CEO Phillip Purcell, has come under fire from shareholders and, more recently, a group of dissident former Morgan Stanley executives has called for Purcell's ouster in paid advertisements.

Software finance company Tideline Capital recently closed a $100 million conduit facility with Wachovia Securities backed exclusively by software receivables.

With the profusion of new CDO managers entering the market, there has been some buzz surrounding the relative inexperience of some managers, and whether or not this will impact the future performance of these deals.

Following the liquidation of 114 corporate-owned Athlete's Foot stores, Moody's Investors Service recently downgraded the shoe retailer's $30 million franchise fee securitization two notches to Baa3' from Ba2'.

Corporation Services Co. entered the securitization services playing field last week, when it launched a new subsidiary, CSC Securitization Services. Richard Taiano is set to head the operations for the team.

Year to date as of 04/07 Term (days) 04/01 04/04 04/05 04/06 04/07 1-week

Full Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market Managers Proceeds (mils) Rank Mkt. Share # of Issues Credit Suisse First Boston 3,449.5 1 16.3 7 Citigroup 3,206.3 2 15.2 5 Barclays Capital 3,195.9 3 15.1 6 Deutsche Bank AG 3,083.7 4 14.6 6 Merrill Lynch & Co Inc 2,502.4 5 11.8 4 Wachovia Corp 1,580.0 6 7.5 3 Goldman Sachs & Co 1,289.0 7 6.1 1 Banc of America Securities LLC 1,244.3 8 5.9 2 JP Morgan 989.9 9 4.7 2 ABN AMRO 479.6 10 2.3 1 Industry Total 21,157.7 - 100.0 20 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 5,670.4 1 21.7 9 Morgan Stanley 3,825.6 2 14.6 13 Citigroup 2,965.7 3 11.3 7 Lehman Brothers 2,639.2 4 10.1 8 UBS 2,632.6 5 10.1 6 Bear Stearns & Co Inc 2,271.2 6 8.7 5 Groupe Caisses d'Epargne 1,742.0 7 6.7 2 Credit Suisse First Boston 889.0 8 3.4 3 Royal Bank of Scotland Group 866.1 9 3.3 2 JP Morgan 685.0 10 2.6 1 Industry Total 26,163.9 - 100.0 64 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 Morgan Stanley 1,579.0 1 27.0 1 JP Morgan 1,400.0 2 23.9 6 Citigroup 1,125.0 3 19.2 3 Barclays Capital 799.1 4 13.7 7 Lehman Brothers 375.0 5 6.4 1 Deutsche Bank AG 199.1 6 3.4 3 Banc of America Securities LLC 199.1 6 3.4 3 Merrill Lynch & Co Inc 174.3 8 3.0 1 Industry Total 5,850.5 - 100.0 14 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 Lehman Brothers 725.8 1 30.4 1 JP Morgan 725.8 1 30.4 1 Barclays Capital 725.8 1 30.4 1 Citigroup 212.0 4 8.9 1 Industry Total 2,389.5 - 100.0 2 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 Countrywide Securities Corp 17,674.8 1 11.6 17 Bear Stearns & Co Inc 17,149.0 2 11.2 24 Lehman Brothers 14,916.3 3 9.8 36 Morgan Stanley 14,097.8 4 9.2 16 Royal Bank of Scotland Group 13,760.5 5 9.0 22 Deutsche Bank AG 12,915.7 6 8.4 24 Credit Suisse First Boston 12,357.6 7 8.1 28 Merrill Lynch & Co Inc 8,743.8 8 5.7 10 Goldman Sachs & Co 6,815.0 9 4.5 11 Citigroup 6,372.2 10 4.2 16 Industry Total 153,004.8 - 100.0 222 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 Banc of America Securities LLC 3,134.2 1 24.2 4 Citigroup 2,230.0 2 17.2 4 Credit Suisse First Boston 1,645.9 3 12.7 2 Morgan Stanley 1,540.6 4 11.9 1 UBS 1,447.2 5 11.2 3 Lehman Brothers 1,012.4 6 7.8 1 Deutsche Bank AG 817.2 7 6.3 2 Goldman Sachs & Co 806.2 8 6.2 2 JP Morgan 317.2 9 2.5 1 Industry Total 12,950.9 - 100.0 11 Source: Thomson Financial

auto ABS 18% credit card ABS 4% global MBS 6% real estate ABS 61% student loan ABS 8% Other 3%

The State of Texas filed an administrative appeal last week against the Public Utility Commission of Texas' decision to give CenterPoint Energy the green light to issue $1.8 billion in rate reduction bonds, delaying the issue that CenterPoint was planning for the near term (see ASR 3/14/05). The appeal was filed last Wednesday in the District Court of Travis County, Texas, where the state capital of Austin is located, and could derail the deal indefinitely. Tom Kelly, spokesman for the Texas State Attorney General's office, declined to comment, saying it does not comment on pending legal matters.

After a shaky three-year period characterized by low issuance, corporate bankruptcies and consolidation, dubbed the perfect storm,' the equipment-least sector is ripe for a comeback, say market observers. Buoyed by strong demand for agricultural equipment, more experienced issuers and higher lease origination volumes in general, the sector is expected to see up to $10 billion in issuance this year, compared to $7.6 billion in 2004, and an even greater increase in the years to follow.

Volume in the primary U.S. ABS market was relatively light last week, coming in just under $5 billion as of Thursday's market close. Real estate ABS accounted for $1.6 billion in total new issues, and was comprised of several smaller deals with just one breaking the $500 million mark. Subprime collateral dominated the home-equity calendar.

In a 45-page report on General Motors and General Motors Acceptance Corp., a team of Merrill Lynch analysts from the unsecured debt and ABS groups highlighted the benefits and drawbacks of GMAC's increased reliance on securitization as its corporate rating heads south. GMAC has already started to change its funding strategy to rely more on secured financing and is likely to be forced to turn to the securitization markets even more if its corporate debt falls below investment-grade status.

NEW YORK - The CDO market is embroiled in an ongoing battle for collateral, and to the consternation of investors, the food fight has forced some managers to seek out alternative solutions, according to delegates at Information Management Network's CDO and Credit Derivatives conference held here last week.