IMCC more coverage and exposure, :-)))) after the action Friday, this is another that could gap tomorrow.
LOL I love seeing all those big $$ figures, associated with a .039 stock, especially one we own.
biz.yahoo.com
US ABS players still hungry as new deals devoured
NEW YORK, Jan 21 (Reuters) - U.S. asset-backed securities (ABS) ended the week on an active note, with investors hungrily
embracing new issuance and turning to the secondary market for extra helpings.
Asset-backed yield spreads tightened by about two basis points across the board on Friday, traders said.
''It was pretty active, a lot of buying, as there has been for the last few days,'' said one ABS trader. ''There's a lot of cash coming into the market, and if they can't
get enough new issue (paper) they're coming to the secondary side as well.''
Paper with stable cash flows, such as auto and credit card product, were seeing the most interest in secondary dealings, this trader added, ''particularly short-end
paper.''
This heavy investor demand, however, has been overwhelming a relatively disappointing supply volume, some on the buyside feel.
''The year has been very slow starting off,'' said one East Coast portfolio manager. ''Everyone thought January was going to be a humdinger but it's been a lot more
quiet than everyone thought it was going to be.''
Demand is significantly stronger for lower credit quality, subordinated paper. Investors shunned unnecessary risk for liquidity for most of last year, with buying of the
subordinate bonds only beginning to catch a bid toward yearend.
''Demand has picked up across the board for subordinate paper,'' according to one ABS analyst, who said spreads on subordinate bonds have tightened some 35
basis points since December.
The East Coast portfolio manager said a U.S. economy that continues to be robust is making buysiders more comfortable with lower-rated paper.
''The economy has done so well, and people are more comfortable with the favorable outlook for the economy,'' she said. ''You can go down in credit and not feel
you're assuming a lot of risk.''
Of course, investors are not dismissing credit quality completely, particularly since asset-backed performance has never really been tested in U.S. economic bad
times.
''We haven't seen a downturn since the early 90s,'' this portfolio manager said, ''and ABS was relatively new then.''
Subordinated bonds are also in high demand in the commercial mortgage-backed securities (CMBS) sector, the portfolio manager added.
''It's hard to get that paper in the secondary CMBS market because everybody wants it,'' she said.
Friday saw two new mortgage-related ABS deals price.
Bombardier Capital Inc., a U.S. division of Canada's Bombardier Inc. (Toronto:BBDa.TO - news), priced $360 million of bonds backed by manufactured housing
loans.
The largest tranche was $85 million in triple-A rated bonds with a one-year average life that came in at a spread of 16 basis points over one-month LIBOR,
according to market sources. That was slightly tighter than the 17 basis-point spread expected.
Pricing expectations were revised on the deal's subordinate bonds, and that roughly $50 million in paper priced at the tight end of new levels, sources said.
Option One, an affiliate of H&R Block Inc. (NYSE:HRB - news), which brought to market on Thursday the Freddie Mac-guaranteed bulk of its home equity
loan-backed transaction, on Friday priced the remaining non-guaranteed portion of its $1.2 billion offering.
The largest piece was a $135.2 million, triple-A rated tranche with a 2.47-year average life that priced at 33 basis points over one-month LIBOR, slightly wider than
the 30 to 32 basis-point spread expected.
Still in the pipeline, Enterprise Mortgage Acceptance Corp. (EMAC) has been premarketing a $405 million franchise loan deal.
IMC Mortgage Co. (OTC BB:IMCC.OB - news) plans to sell $261.5 million of fixed- and floating-rate paper secured by home equity loans, with financial
guarantee from FSA. The largest piece is $196.5 million in triple-A rated paper with a 2.8-year average life. Price talk on that piece is 115 basis points over
Treasuries.
Also, Deutsche Bank was said to be readying a CMBS deal that could price next week. The $1 billion offering is said to be very short term, with the triple-A portion
having only a 2.1-year average maturity, and backed by 16 to 18 loans.
More Quotes
and News:
Bombardier Inc (Toronto:BBDa.TO - news)
H&R Block Inc (NYSE:HRB - news)
IMC Mortgage Co (OTC BB:IMCC.OB - news)
Related News Categories: Canadian Market News, options, US Market News
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