Securitization

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

Mitsubishi Motors is in the market with an auto deal led by Banc of America Securities.

GE Capital is in the market with a $1.27 million private label credit card transaction. The deal is led by Banc of America Securities and Deutsche Bank Securities.

The government has delayed a planned release of stress test results of the 19 largest banks until May 7, according to a government official.

An MBIA subsidiary and LaCrosse Financial Products have filed a lawsuit against two Merrill Lynch entities for misrepresentation and breach of contract in connection with credit default swaps tied to subprime residential mortgages.

Accredited Home Lenders of San Diego, once a top ranked subprime lender, is expected to file for bankruptcy protection in Delaware, perhaps as soon as this afternoon, according to a source close to the matter.

The necessary post-mortem analyses for the financial system's collapse have begun in earnest. While some have taken to talking about Wall Street's "stupidity," this is an unsatisfying and ultimately counterproductive approach. Clearly, the financial crisis had numerous major and contributing causes (the true "perfect storm"), but failures of models and analytics were key factors.

Among the victims claimed by the global financial crisis, a number of Kazakh banks have been particularly ravaged. Having borrowed heavily abroad and made hefty gambles on local real estate, much of the country's finance industry is flailing.

The European real estate market's lack of liquidity is as much a result of the disappearance of competent intermediaries as it is of the credit crisis.

Critics can say what they want about TALF.

Italy's more conservative approach to lending has resulted in the country's housing market withstanding the current economic environment, unlike neighboring European countries. This has also preserved the fundamentals of securitization structures.

Recent bank failures have cast doubt on whether existing structural mechanisms are sufficient to protect securitization transactions from the credit risk of the counterparties on which they rely. In cases where Lehman Brothers and certain Icelandic banks were a crucial counterparty, for example, existing mechanisms did not protect structured finance bondholders from downgrades and in some cases defaults.

The Term Asset-Backed Securities Loan Facility (TALF) has kick-started U.S. primary market issuance, but the flurry of activity won't tempt European governments to follow with a European version of TALF. Market analysts said that governments, in particular the U.K., have worked on several initiatives that separately touch upon many similar points housed under TALF.

The Lehman Brothers bankruptcy was a turning point for the securitization market as counterparty risk assumed a role more important than any investor could have ever imagined.

Refinancing response has been relatively muted relative to the historically low mortgage rate levels that the market has been seeing lately.

This past month, credit card reform has been in the spotlight.

The effectiveness of the Term Asset-Backed Securities Loan Facility (TALF) is being questioned because of the so-called anemic interest in the program.

Long gone are the glory days of ABCP. These days, the muted activity in the market is mostly limited to government-supported programs or restructurings. Market sources said that with things the way they are, investors can at least count on betting on a sure deal.

Market participants remain optimistic that new deal flow will hold, despite bankruptcy fears from the Detroit Big Three and a slowdown in sales volume.

CNH Capital America is prepping a $784 million equipment-backed loan via Barclays Capital and Credit Suisse under the TALF program.