Securitization

In a report released today, Fitch Ratings said that the wholesale vehicle market is exhibiting weakness because of factors such as a weak economy and a soft job market.

Residential Capital (ResCap), a division of GMAC Financial Services, is set to exchange or redeem $14 billion of its existing debt.

GMAC and Residential Capital (ResCap) took ratings cuts today that brought their ratings deeper into junk territory, as Standard & Poor’s and Fitch Ratings both took actions against the specialty finance entities.

Triad Guaranty announced that it has entered into an agreement with Lightyear Capital, a New York-based private equity firm, to fund the creation of a new monoline.

Tougher financing conditions, coupled with doubts over the return of looser credit, are drawing the leading Brazilian banks back to structured finance.

In a hurried effort to shine light on the credit derivatives market - viewed as potentially the next domino to fall in the credit-market crisis - a new project by accounting standard setters could require firms to disclose more details about their exposure to the over-the-counter instruments currently on their books.

Ahead of Wednesday's statement from the Federal Open Market Committee, mortgage volume was substantially below normal as many participants held close to the sidelines. The overall tone of the sector, however, was supportive though generally tracking the curve and swaps. Asian investors were a steady presence with interest focused in 5s and 5.5s, while money managers and other real money were buying in 5s through 6s. Hedge funds, meanwhile, were two-way while servicers were generally quiet.

The municipal CDS market has come into sharp focus in the past year with monoline troubles, spread widening, and the general negative economic outlook calling attention to credit risk.

April remittance reports released last week reflected a continued dip in the 30- and 60-day delinquency buckets in most trusts across all the indices, Barclays Capital analysts reported.

Responding to investor gripes about lack of transparency and ratings instability for CDO transactions, Fitch Ratings unveiled new global rating criteria for corporate CDOs last week.

MJX Asset Management last week closed Veer Cash Flow CLO, a newly restructured incarnation of a market value transaction, Veer Loan Opportunities Fund.

A major clash of ideals is brewing in Washington, D.C. as lawmakers and regulators last week introduced policies that would change the way credit card portfolios are managed.

Six months after several of Merrill Lynch & Co.'s top fixed-income executives were ousted from their jobs, another round of shakeouts is underway, which involve many of the bank's senior executives in fixed income.

The timeshare sector is making a few waves in the securitization sector this month. Over the course of a week, three deals came to market, two of which priced at press time.

Spread tightening continues in the European ABS secondary market. Dutch paper has come in the most, followed by Italian.

Major legislative and regulatory propasals came forward last week, which hint at potentially big changes for the student loan and credit card industries.

The Federal Reserve Board has today announced an expansion of the asset classes eligible under the Term Securities Lending Facility (TSLF). The board said that triple-A-rated ABS will be eligible as schedule II collateral starting with the May 7 auction.

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

Standard & Poor’s announced that it will no longer be rating U.S. closed-end second-lien mortgage loans as well as related RMBS. Since the S&P projects an “unprecedented” level of loan performance deterioration, it explained that the market segment does not allow for “meaningful analysis of new issuance and securitization.”

H&R Block has closed the sale of the mortgage loan servicing business of its Option One Mortgage Corp. subsidiary effective April 30. As previously announced, the purchaser was American Home Mortgage Servicing, which is an affiliate of WL Ross & Co. According to a release from H&R Block, the proceeds of the deal at closing were roughly $1.3 billion. Option One used the proceeds partly to repay more than $980 million on its servicing advance facility, which represents the outstanding balance of this facility. After repayment of servicing advances, Option One realized net cash proceeds of slightly over $230 million and retained a receivable relating to certain servicing assets of roughly $100 million.