CDOs

Just as the student loan ABS sector was digesting proposed cuts to federal student loan subsidies proposed by Congress, it was hit with a Bush administration proposal to cut lenders' special allowance payments (SAP) by 50 basis points in the 2008 budget plan. If Congress sanctions the changes, then it could change operations at several student loan providers. Future student loan ABS structures might experience declines in excess spreads from their existing levels, say industry observers.

Subprime lender stocks fell along with the ABX.HE index last week, as more news of troubled subprime lenders reverberated through the market. And unlike in the recent past, the news affected the second and third-largest U.S. subprime lenders - HSBC Holdings Plc and New Century Financial Corp., respectively. While sources betting against the subprime sector could almost be described as giddy, those on the other side of the fence worried that the damage 2006 vintage loans seemed to be causing for lenders might be the beginning of unprecedented defaults.

Ordinarily, a week of $20 billion in new ABS issuance would be considered a marvelous accomplishment, and one that would be expected for the market, especially after coming off of a major industry conference. Although the consumer ABS sectors hummed along with scarcely a worry, that buoyancy was juxtaposed against wild, painful gyrations in the HEL sector.

Credit derivatives market participants following the Aon Corp. versus Societe Generale case - which was on appeal before the United States Court of Appeals for the Second Circuit - were finally able to exhale last week. The court overturned a 2006 district court ruling that had favored Aon. The decision effectively sealed a Pandora's box full of disgruntled counterparties seeking to argue contract terms, according to industry experts.

Fitch Ratings continued its business expansion and substantial reorganization of its executive lineup last week.

Domino's Pizza is planning to issue up to $1.85 billion in asset-backed securities, funded by franchise fees from its stores. In turn, the company plans to use the funds to finance a stock repurchase plan.

Moody's Investors Service will start publishing presale reports for its rated U.S. subprime RMBS. The reports will offer the market a view of a transaction's rating drivers before the deal closes and, through standardized reporting, allow investors to make comparisons across deals.

The Securities and Exchange Commission has released its telephone interpretations on Item 122 of Regulation AB. These were released after Paula Dubberly, SEC associate director, gave a preview on the Commission's stance on this item at the recently concluded American Securitization Forum conference held in Las Vegas.

In a move that will make its Spring ABS 2007 have more of an international focus, Information Management Network will be working closely with the International Finance Corp. (IFC) to create a full day of emerging markets coverage at IMN's Miami conference to be held on April 29 to May 2.

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 10% credit card ABS 8% catatrophe bonds 0% enterprise finance 0% equipment ABS 2% real estate ABS 70% structured settlements 0% student loan ABS 8% trade receivables 1% utilities ABS 0%

Guy Carpenter & Co., a global risk and reinsurance specialist, appointed Chi Hum as global head of distribution for insurance-linked securities in its investment banking specialty practice. The move is a bid to strengthen the firm's capital markets investor contacts and place securities and derivatives with investors.

Las Vegas - The structured investment vehicle (SIV) market came up with several major developments in 2006, including two repeat sponsors that launched new vehicles, and a new type of sponsor, likely the Canadian Teacher's Fund. In the year ahead, expect to see U.S. pension funds take a closer look at participating in the sector, while some managers examine new possibilities for underlying assets, including structured finance paper, said industry professionals at the ASF 2007 in Las Vegas last week.

Although the rumor was running rampant throughout the industry last week, it appears as though Bank of America Corp. is not interested in acquiring or embarking on a joint venture with mortgage giant Countrywide Financial Corp. Analysts noted last week that it's highly unlikely BofA would consider buying a mortgage lender that seeks to finance itself through bank deposits. At most, they said, the bank might consider something along the lines of outsourcing its mortgage processing to Countrywide.

Las Vegas - Cohen & Co. last week announced it had snagged Taro Masuyama, the former head of Asia Pacific and Japan structured credit products at Merrill Lynch, to head up its new asset management business in the Asian-Pacific region, Cohen Asia. During Masuyama's seven-year tenure at Merrill, he oversaw the investment bank's CDO business in the region, which originated both cash and synthetic CDOs backed by Japanese and other Asian assets.