In auto ABS, prime collateral benchmark issuer Honda issued 2 and 3 year weighted average life (WAL) fixed rate bonds priced as swaps + 3 and swaps + 4 respectively. This pricing is equivalent to that of Hondaâs last auto ABS deal in June 2004. Elsewhere, in auto ABS, spreads on General Motors ABS bonds remained unchanged after S&P downgraded the corporate credit rating on GM to BBB- from BBB. Currently, we believe the marketplace sees little additional servicer risk as a result of the downgrade, however the long-term effects of this rating action are yet to be determined.
The credit card sector saw its first public new deal from sub-prime issuer Metris in nearly three years. Metrisâ trusts historically have suffered from poor collateral performance including high charge-offs and low excess spread. Recently, however, Metris collateral has shown improved performance, opening the door to this new deal. The floating-rate 2 year WAL AAA rated bonds priced at Libor + 15, floating rate 2 year AAs priced at Libor +39, and the BBBs priced at Libor + 135. These spreads are significantly wider than comparably rated prime collateral deals with historically strong collateral performance measures.
Standard & Poorâs is a leading provider of independent fixed-income evaluations in including 1.3 million hard-to-price securities including high yield, high grade, mortgage-backed and asset-backed securities.