Securitization

Moody's Investors Service last week downgraded domestic deals in Mexico wrapped by FGIC to Aa3.mx' from Aaa.mx.' While the agency had downgraded monoline-wrapped emerging-market deals on its global currency scale before last week, this move marked the first time Moody's lowered the rating on wrapped deals on Mexico's national scale. GMAC Financiera is the originator of the deal, which is

The U.K. nonconforming lending market got smaller last week when the news of two more lenders stepping out of the game hit the European market - Southern Pacific Mortgage Loans (SPML) and Preferred Mortgage Loans (PML), which are both units of Lehman Brothers.

Camulos Capital closed Camulos Loan Vehicle 1 last Wednesday, kicking off the second quarter with positive news in the way of new issuance. The $731 million cash flow CLO, which is the first CLO for the manager, offered triple-A to double-B paper in five tranches priced at 85, 250, 300, 500 and 800 basis points, according to ASR Scorecards database. Morgan Stanley underwrote the deal, and Citigroup is the trustee.

Even with the U.S. Treasury making an aggressive attempt to revamp the country's financial system, market experts believe that there is not much chance of this happening in 2008.

The subprime mortgage meltdown continues to alter the asset securitization market. In the first place, issuance was just $63.8 billion, a 71.7% plunge from the $225.6 billion in transactions that the industry completed at the end of the first quarter last year. With business down by more than two-thirds from last year, it left leading investment banks to juggle the bad news of writing down losses and imposing layoffs while trying to get work done, too.

U.K. nonconforming lenders continue their exodus from the market. This has left borrowers with little option for refinancing and left lenders facing mounting arrears.

With origination of securitizable assets slipping among leading developed countries, the vice grip on global liquidity still unshakable, and Western European investors loathe to buy all kinds of ABS and MBS, it would follow that Russian originators of securitizable assets would be yanking the reins on their galloping pace of lending.

ABS market professionals spent much of last week tallying up production from the first quarter. Notwithstanding the typical sluggishness brought about by the opening days of a new fiscal period, volumes were modest.

Moody’s Investors Service yesterday downgraded three tranches from Caja Madrid's high LTV Spanish RMBS, Madrid RMBS II. The deal priced in December 2006 and by August last year, Caja Madrid reported it had tapped the securitization's reserve fund for €846 million ($1.32 billion), or 1.4% of its required amount.

Credit deterioration for U.S. CDOs was almost wholly contained to U.S. dollar-denominated resecuritizations in 2007, according to a recent study by Moody’s Investors Service. Moody's downgraded a total of 1,331 tranches of U.S. dollar-denominated resecuritizations in 2007, which accounted for 92% of the 1,448 downgrade actions for all CDOs during the year.

Christopher Beaudet, who was a managing director and co-head of the ABS group at Deutsche Bank Securities, left the company recently. While at Deutsche, much of Beaudet’s focus was on the securitization of auto loans and leases, equipment leases, commercial loans and franchise loans. He joined the company in February 2000 as part of a group of bankers that Deutsche recruited from what was then Credit Suisse First Boston. He was credited with building Deutsche into one of the top underwriters of auto and equipment ABS in recent years. His departure leaves Andrew Peisch, also a managing director who joined in 2003, as sole managing director and head of the ABS group at Deutsche.

Fitch Ratings has created two new portfolio risk officer positions, in which high-level executives will enhance analytical oversight, experience and training to all structured finance groups. Glenn Costello, a managing director who was co-head of the rating agency's U.S. RMBS group, won a promotion as portfolio risk officer of the structured finance group. He reports to group managing director John Bonfiglio, according to Fitch. Managing director Stuart Jennings, formerly head of Fitch’s European RMBS team, is now portfolio risk officer for EMEA structured finance, reporting to group managing director Ian Linnell.

IKB Deutsche Industriebank faced fresh allegations from FGIC. The bond insurer filed a suit against the German bank through a New York City court at the beginning of March.

CIFG Holding, the holding company for CIFG's financial guaranty subsidiaries, announced late today that it has formally requested that Fitch Ratings withdraw the insurer financial strength ratings for the following affiliated companies: CIFG Guaranty, CIFG Assurance North America and CIFG Europe.

Eric Rosensweig has left his post as managing director of FGIC, where he focused on future flow deals from the emerging markets, according to a knowledgeable source. On his watch, the agency wrapped deals backed by diversified payment rights originated by such Turkish banks as Vakifbank, Akbank and HSBC Turkey, and by Kazakhstan's Kazkommertsbank. Rosensweig joined FGIC in June 2005 from MBIA, where he had been instrumental in building up the agency's future flows portfolio. No word yet on whether he has been replaced.

U.S. Housing and Urban Development Secretary Alphonso Jackson announced today he is resigning as the nation's chief housing officer. Jackson will conclude his government service as the nation's 13th HUD Secretary on April 18, said a HUD press release. "During my time here, I have sought to make America a better place to live, work and raise a family," Jackson said. "I take great pride in working alongside some of the most dedicated civil servants in America. The hardworking people at HUD make a difference in the lives of thousands of Americans daily." According to the HUD release, Jackson during his term oversaw HUD's $37 billion budget and 9,200 employees. The former HUD secretary has recently caught the ire of the U.S. Senate after refusing to answer questions regarding accusations that he had in appropriately directed his staff to steer federal housing contracts to Jackson's political allies. Senate Banking Committee Chairman Chris Dodd (D-Conn.) asked for Jackson's resignation earlier in March, stating that Jackson was unfit to lead HUD now that the U.S. is in the midst of a housing crisis.

The real estate industry has become a dirty word over the past nine months or so. However, real estate investment trusts (REITs) are standing their ground despite the mortgage market's liquidity fears, with new companies looking to enter the space, notably on the agency MBS side.

Mortgage-backed volume was running below normal in the first half of the week with flows relatively balanced. MBS spreads widened on Monday as Treasurys gave up more of their flight to quality premium. In general, overseas investors showed interest in 5.5%s and 6%s, while servicers moved into 5% coupons. Other investors such as money managers and hedge funds were better sellers. Supply was burdensome for the limited participation - totaling nearly $3 billion.

The market for mortgage finance might be at a standstill in the U.S. and thawing in Europe, but Australian loan originators have a new source of financing, if indirectly, in the form of the National Australia Bank (NAB).

With the mood in the markets still dour and leading bond insurers declaring structured finance off-limits for either six months or until further notice, it may seem premature to canvass the monolines on where they stand right now in respect to emerging markets.