CDOs

Several factors have kept annual student loan ABS issuance in the healthy area of $44 billion for the last few years, including government guarantees that act as enticing forms of credit enhancement for much of the sector's underlying collateral.

Hoping to capitalize on the various structured finance growth opportunities beyond securitization, seven ABS senior executives have left BMO Capital Markets to launch Six Degrees Capital Management (SDCM).

With the blessing of a triple-A rating from Moody's Investors Service, hedge fund Aladdin Capital Management became the proud parent of the newest credit derivative product company on the block. The road to obtaining a CDPC rating is a long, drawn out process, sources said - but demand certainly seems strong enough to obtain one.

Last week Federal Reserve Chairman Ben Bernanke managed to say something that both the stock market and the Treasurys market wanted to hear. There would be no pressing need to cut the target funds rate to spur economic expansion, and inflation was not yet out of hand.

In response to the inherent complexities of CRE CDO loans, Standard & Poor's released a report last week detailing how it evaluates companies who act as servicers and special servicers in this growing market segment. The report outlines the different servicing roles for CRE CDO transactions and the rating agency's method for evaluating each of them based on their specific responsibilities.

Lawmakers in the House recently proposed legislation designed to stop unethical practices that private student loan lenders sometimes undertake to gain preferred lender status with universities.

Last week, the American Securitization Forum filed a comment letter with the staff of the State of New York Banking Department regarding New York sales finance licenses, requesting that the department clarify the status under New York Banking Law Article 11-B of parties that acquire retail installment contracts in the secondary market.

Los Angeles-based asset management firm Trust Company of the West - the world's largest CDO manager - is preparing to become a classroom of sorts. In the coming months, TCW will open its doors to a group of Chinese investors interested in learning about CDO management so that they can emulate it. The arrangement will prove beneficial to TCW because the CDO manager, along with a growing number of U.S. CDO market participants, are touting the introduction of CDO technology to Asia's rapidly growing economies as one of this year's largest developments.

The newest spin on the ABX index, the ABX tranche indices (TABX), debuted in the market on Valentine's Day, bringing with it hopes of a benchmark for CDO pricing.

Babson Capital Management closed a $600 million CDO last week. The Sapphire Valley CDO, Ltd. portfolio consists of approximately 80% leveraged loans and 20% securities. Of the 20% securities, 40% are expected to be sourced synthetically through total return swaps (TRS) which will provide investors with assets that are difficult to source in the cash market, the company said. "TRS allowed us to increase our exposure to top tier managers from strong CLO vintages while reducing the time required to ramp-up," said Matthew Natcharian, managing director and head of Babson Capital's structured credit team in Springfield. The weighted average cost of the debt for the transaction was Libor plus 46 basis points. Banc of America Securities arranged the obligation and buyers included both U.S. and international institutional investors.

Relationship pundits say an indispensable element to any successful connection is communication. In the world of structured finance, where the stakes are higher, a solid liquidity backstop is emerging as the key to a successful relationship between CDOs and the asset-backed commercial paper conduits that fund them.

Since the story was written sources said that 13 members of the SunTrust CDO team have left the company for another opportunity.

Full Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market Managers Proceeds (mils) Rank Mkt. Share # of Issues Wachovia Corp 998.8 1 22.4 2 HSBC Holdings PLC 859.4 2 19.3 1 Banc of America Securities LLC 797.1 3 17.9 2 JP Morgan 704.8 4 15.8 2 Barclays Capital 598.8 5 13.5 1 Morgan Stanley 492.3 6 11.1 1 Industry Total 4,451.1 - 100.0 5 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 Barclays Capital 2,323.0 1 27.5 1 Bear Stearns & Co Inc 1,485.8 2 17.6 3 JP Morgan 918.0 3 10.9 2 Citigroup 767.7 4 9.1 1 Morgan Stanley 675.0 5 8.0 2 Banc of America Securities LLC 669.0 6 7.9 1 Deutsche Bank AG 603.3 7 7.2 2 Goldman Sachs & Co 500.0 8* 5.9 1 Lehman Brothers 500.0 8* 5.9 1 Industry Total 8,441.7 - 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 JP Morgan 2,000.0 1 41.9 1 Banc of America Securities LLC 1,812.4 2 38.0 5 Wachovia Corp 962.5 3 20.2 3 Industry Total 4,774.9 - 100.0 8 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 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 Citigroup 4,881.5 1 14.8 8 Morgan Stanley 3,946.7 2 12.0 3 Merrill Lynch 3,666.8 3 11.1 4 Deutsche Bank AG 3,652.5 4 11.1 3 Lehman Brothers 2,981.8 5 9.0 7 Royal Bank of Scotland Group 2,669.7 6 8.1 4 Bear Stearns & Co Inc 1,979.1 7 6.0 5 Barclays Capital 1,766.8 8 5.4 6 Credit Suisse 1,668.0 9 5.1 2 UBS 1,351.5 10 4.1 2 Industry Total 32,987.0 - 100.0 47 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 Goldman Sachs & Co 1,380.7 1* 29.5 1 Lehman Brothers 1,380.7 1* 29.5 1 Banc of America Securities LLC 1,380.7 1* 29.5 1 JP Morgan 541.2 4 11.6 1 Industry Total 4,683.2 - 100.0 2 Source: Thomson Financial

auto ABS 15% credit card ABS 11% real estate ABS 67% student loan ABS 6%

The securitization industry is preparing to strike back at a U.S. Court of Appeals ruling that allows the Federal Deposit Insurance Corp. (FDIC) to ignore a credit card ABS trust contract's ipso facto clause, which would have triggered an early amortization of outstanding notes from defunct credit card issuer NextBank.