CDOs

Issuance of securities backed by commercial mortgages is in the longest lull in more than 10 years, according to Chris Lau, an analyst at Royal Bank of Scotland Group PLC's RBC Greenwich Capital.

The story remains the same in Europe. Much of what little public ABS deal flow there is continues to be retained for European Central Bank eligibility.

Moody's Investors Service said in a report that it expects further write-downs for the large European banks' structured finance portfolios resulting from continued widening in U.S. subprime RMBS spreads and deterioration in the credit quality of financial guarantors.

Citigroup probably will write down the value of CDOs by $8 billion this quarter, Mike Mayo, a Deutsche Bank analyst, wrote in a report to clients Tuesday after Merrill Lynch said it would sell CDO holdings for 22 cents on the dollar.

Merrill Lynch has planned a series of moves to improve its capital position, including the sale of problematic mortgage-related CDOs for $6.7 billion, according to yesterday’s release.

IndyMac Bank's failure, and the cleanup that followed, were shocking, but not unprecedented in the structured finance market.

The largest Spanish corporate default, Martinsa-Fadesa, a Spanish homebuilder, signals potential risks in SME portfolios, Deutsche Bank analysts said.

Fitch Ratings said last week that the number of CLO managers is likely to decline by about 20% over the next three years as a result of managers being replaced or withdrawing from the market.

The financial guarantor industry is still holding on after nearly a year of downgrades, write-downs, litigation and stagnant new issuance. While some have stopped writing new business altogether, others are taking advantage of the challenging economic environment.

The European Securitization Forum (ESF) and the Securities and Financial Markets Association (SIFMA) hosted a seminar last week investigating the explosion in U.S. subprime litigation and what implication it had for European market participants.

It's looking more likely that the credit derivative product company (CDPC) Athilion Capital Corp. will be downgraded over the short term. Until now, CDPCs had been relatively unaffected by the credit crunch, but the latest action on Athilion will bring this sector under the spotlight.

Primary issuance and secondary trading remained light last week as Fannie Mae and Freddie Mac uncertainties continued to weigh on the ABS market's mood. This is despite U.S. Treasury Secretary Henry Paulson's rescue plan that will, in essence, guarantee the GSE bonds by buying equity stakes in these companies and boosting the lines of credit available to them.

Deerfield Capital has acquired the management contract for Robeco CDO II, according to today’s release.

Baker & McKenzie has hired Hans Montag as partner in its New York office. Montag joins the law firm from the New York office of Clifford Chance where he worked for almost ten years.

Alcentra, a specialist investor focused on subinvestment-grade debt, is moving one of its top managing directors from London to New York to lead its U.S. leveraged loan business, according to the Financial News.

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

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.

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

Year to date as of 08/16 Term (days) 08/10 08/11 08/12 08/13 08/16 1-week

The Securities and Exchange Commission delivered a blistering report Tuesday that detailed the shortcomings of Fitch Ratings, Moody's Investors Service and Standard & Poor's when it came to rating RMBS and CDOs.