Securitization

The U.S. House of Representatives approval of the long-awaited housing bill did not boost morale among traders last week since it came after a slew of negative ABS market announcements.

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.

Last week, Fitch Ratings upped the rating on the only outstanding future-flow credit card deal from Russia, an initially $300 million issue from Rosbank. The boost spanned five notches, taking the deal to ‘A-' from ‘BB'. It came two weeks after Moody's Investors Service elevated its rating on the deal to ‘Baa3' from ‘Ba2'.

Finacity Corp. recently closed a trade receivables transaction for Papel, Carton y Derivados, a Mexican paperboard and containerboard maker that markets under the slogan "PCD does it for you."

The tone in the first half of the week was decidedly more supportive for MBS compared to the previous week. Despite a further sell-off in Treasurys, convexity selling was limited. With spreads at historical wides, many investors became opportunistic buyers.

The restructuring of structured investment vehicle, SIV Portfolio plc, which was formerly known as Cheyne Finance plc, could pave the way for similar transactions. This is not only the case for the SIV sector but for other restructurings in CDOs as well as the broader structured finance market.

New home dropped 0.6% in June to 530,000, although the result was better than expected, according to an RBS Greenwich Capital report. This particularly true if you take into consideration that the figures in March, April, and May were all revised up by a combined 50,000 units.

Single-family existing-home sales fell 2.6% to a seasonally adjusted annual rate of 4.86 million units in June from a pace of 4.99 million in May, and are 15.5% lower than the 5.75 million-unit rate in June 2007, according to yesterday’s National Association of Realtors release.

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

Freddie Mac reported that 66% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan balance in 2Q08,.

Freddie Mac reported a huge jump in mortgage rates this week. The 30-year fixed mortgage rate averaged 6.63%, up 37 basis points from last week's 6.26% average. This is the highest mortgage rates have been since August 2, 2007 when it was at 6.68%.

National City Corp. swung to a second-quarter loss as credit losses continued to surge. The company, which sees lower credit-loss provisions in the second half of the year, said it is the best-capitalized bank among its peer group.

The House voted yesterday to pass a massive housing reform package that extends a lifeline to beleaguered mortgage giants Fannie Mae and Freddie Mac and is laden with tax-exempt bond provisions, including the elimination of the alternative minimum tax for housing bonds.

GMAC Financial yesterday named Thomas Marano as ResCap’s chairman and chief executive officer, effective immediately.

A compromise housing bill emerged late Tuesday that finally appears to bridge the gap between House and Senate banking leaders.

Assured Guaranty yesterday sought to reassure investors about its future, while market participants considered the possibility of a municipal market with no more bond insurers rated triple-A by all three major rating agencies. This came one day after Moody’s Investors Service announced it had put both Assured Guaranty Corp. and Financial Security Assurance on watch for possible downgrade.

Avon, Conn.-based Structured Finance Advisors (SFA), which has been an investor in the ABS and MBS sectors since 1993, is teaming up with two commercial mortgage veterans to set up a fund that will take advantage of the current lack of market liquidity in the sector, according to Joe Lorusso, president at the firm.

General Motors Corp. and Ford Motor Co. have about a 46% chance of default within five years, according to Bloomberg .

Jonathan Kempner, president and chief executive officer of the Mortgage Bankers Association (MBA), will be stepping down on Dec 31, according to an MBA release.

Wachovia reported a second quarter net loss of $8.9 billion today, and, consequently,will exit its general bank wholesale mortgage origination channel.